Hasbro (HAS) 10-K risk factor changes: FY2018 vs FY2017

From time to time, including in this [removed: Annual Report on] Form 10-K and in our annual report to shareholders, we [removed: make] [added: publish] “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

These “forward-looking statements” may relate to [removed: such] matters [added: such] as our business and marketing strategies, anticipated financial performance or business prospects in future periods, expected technological and product developments, [added: relationships with customers and suppliers, purchasing patterns of our customers and consumers,] the expected content of and timing for scheduled new product introductions or our expectations concerning the future acceptance of products by customers, [added: expected benefits and plans relating to acquired brands and properties,] the content and timing of planned entertainment releases including motion pictures, television and digital [removed: content; and] [added: products,] marketing and promotional efforts, research and development activities, [added: geographic plans, adequacy of supply, manufacturing capacity and expectations to reduce manufacturing in China, adequacy of our properties, expected benefits and cost-savings from certain restructuring actions, capital expenditures, working capital,] liquidity, and [added: other financial, tax, accounting and] similar matters.

We undertake no obligation to make any revisions to the forward-looking statements contained in this [removed: Annual Report on] Form 10-K or in our annual report to shareholders to reflect events or circumstances occurring after the date of the filing of this report.

_Our strategy involves focusing on franchise and key partner brands, and successfully [removed: developing] [added: developing, or in the case of partner brands, successfully working with our partners to develop,] those brands across [removed: the] [added: our] brand blueprint in a wide array of innovative toys and games, consumer products, storytelling and digital experiences.

We are moving away from SKU making behaviors, which involve [removed: building] [added: developing] a large number of [added: different] products across many brands, towards global brand building with an emphasis on developing our franchise and key partner brands, which we view as having the largest global potential.

[added: But this focus also means that our future success] depends disproportionately on our [added: and our partners’] ability to successfully develop this select group of brands across [removed: our] [added: the] brand blueprint and to maintain and extend the reach and relevance of these brands to global consumers in a wide array of markets.

In [removed: 2017] [added: 2018,] revenues from our seven franchise brands, [removed: LITTLEST PET SHOP,] [added: BABY ALIVE,] MAGIC: THE GATHERING, MONOPOLY, NERF, MY LITTLE PONY, PLAY-DOH and TRANSFORMERS, totaled [removed: 49%] [added: 53%] of our aggregate net revenues.

Revenues from our key partner brands, including [added: BEYBLADE,] DISNEY PRINCESS and DISNEY FROZEN, MARVEL, STAR WARS, DREAMWORKS’ TROLLS, [removed: BEYBLADE] and YO-KAI WATCH, constituted [removed: 24%] [added: 22%] of our aggregate net revenues in [removed: 2017.][added: 2018.]

This challenge is more difficult with the [removed: ever increasing] [added: ever-increasing] utilization of technology and digital media in entertainment offerings, and the increasing breadth of entertainment available to consumers.

[removed: _Storytelling] [added: _Engaging storytelling] across media is an increasingly important factor for driving brand awareness and successfully building brands._

Not only our efforts, but the efforts of third parties, such as [added: licensors and] motion picture studios with whom we work, heavily impact the [added: amount, content and] timing of media development, release dates and the ultimate consumer interest in and success of these media efforts.

In [removed: 2017,] [added: 2018,] we developed and marketed significant product lines tied to the [removed: scheduled] motion picture releases by key partners of [removed: DISNEY’S BEAUTY AND THE BEAST, MARVEL’S GUARDIANS OF THE GALAXY VOL.][added: BLACK PANTHER, AVENGERS: INFINITY WARS and SOLO: A STAR WARS STORY.]

For [removed: 2018,] [added: 2019,] we are developing and marketing significant product lines tied to the scheduled motion picture releases by key partners of a number of properties, including [removed: BLACK PANTHER, AVENGERS: INFINITY WARS, SOLO: A STAR WARS STORY] [added: DISNEY’S ALADDIN, DISNEY’S FROZEN II] and [removed: ANT-MAN AND THE WASP.][added: STAR WARS: EPISODE IX.]

Similarly, we are developing and marketing products for entertainment we play a more active role in developing or develop ourselves, such as [removed: TRANSFORMERS,] [added: TRANSFORMERS and] MY LITTLE [removed: PONY and BUMBLEBEE.][added: PONY.]

_Lack of sufficient consumer interest in entertainment media we [added: or our partners] produce or for which we offer products can harm our business._

Under the relationship we entered with Paramount in October 2017 we plan to play a [removed: bigger] [added: more significant] role in the production and financing of motion pictures based on our properties.

That has the advantage of giving us more input to what [added: and when] properties are developed into motion [removed: pictures and when,] [added: pictures,] and can allow us to earn a greater return from successful films, but it also increases the money we will directly spend on film production and puts that [added: investment at risk.]

If our motion pictures are not as successful as we anticipate they will be, or if we are not able to produce and distribute films according to the schedule we have planned, [added: due to creative or other difficulties or delays,] our financial performance will be negatively impacted.

Similarly, [removed: Hasbro Studios’] [added: our] programming distributed both domestically and internationally, Allspark [removed: Animation] [added: Animation’s] and Allspark [removed: Pictures] [added: Pictures’] releases and Backflip Studio’s digital products compete with content from many other parties.

During [removed: 2017] [added: 2018] we spent [removed: $48.0] [added: $132.0] million for television programming and film projects [removed: being developed by Hasbro Studios] [added: we are developing] and we anticipate that we will [removed: continue spending at] [added: spend approximately $65.0 million to $85.0 million in 2019, and anticipate] comparable or higher levels in [removed: 2018 and] future years.

At December [removed: 31, 2017, $238.0] [added: 30, 2018, $236.9] million, or 4.5%, of our total assets, represented our investments in the Discovery Family Channel.

Further, ecommerce is growing significantly and accounting for a higher portion of the ultimate sales of our products to [added: consumers.]

[removed: Similarly, our expenses can be] significantly impacted, in U.S. dollar terms, by exchange rates, meaning the profitability of our business in U.S. dollar terms can be negatively impacted by exchange rate movements which we do not control.

During [removed: 2015 and 2016,] [added: 2018,] certain key currencies, such as the Euro, Russian Ruble, and Brazilian Real depreciated significantly [removed: compared to] [added: against] the U.S. dollar.

_Global and regional economic downturns that negatively impact the retail and credit markets, or that otherwise damage the financial health of our retail customers and consumers, [added: or other factors negatively impacting retail sales,] can harm our business and financial performance._

[removed: As an example of these risks, our] [added: Our] revenues and profitability for [removed: 2017] [added: 2018] were negatively impacted by [added: the ongoing] economic [removed: downturns] [added: challenges] and resulting lower sales of our products in the United Kingdom and in Brazil.

The economic downturn in the United Kingdom [removed: was] [added: is] partly caused by uncertainly around Brexit.

If these markets, or other significant markets, experience economic difficulties in [removed: 2018] [added: 2019] it can harm our business and financial results.

In [removed: 2017] [added: 2018] revenues in emerging markets constituted approximately 14% of our net revenues, up from only 6% of our net revenues in 2010.

[added: In addition to the need to successfully anticipate and serve different] global consumer preferences and interests, sales and operations in emerging markets that we have entered, may enter, or may increase our presence in, are subject to other risks associated with international operations, including:

We currently have in-licenses to several successful entertainment properties, including MARVEL and STAR WARS, [removed: as well as] DISNEY PRINCESS and DISNEY [removed: FROZEN.][added: FROZEN, BEYBLADE and DREAMWORKS’ TROLLS.]

In recent years our sales of products under the [removed: MARVEL and] [added: MARVEL,] STAR WARS [added: and BEYBLADE] licenses have been highly significant to our business.

In 2016 we began sales of products based on the DISNEY PRINCESS and DISNEY FROZEN properties, which contributed [removed: significantly] to our performance.

Additionally, the logistics of supplying more and more product within shorter time periods increases the risk that [added: we will fail to achieve tight and compressed shipping schedules, which also may reduce our sales and harm our financial performance.]

For the fiscal year ended December [removed: 31, 2017,] [added: 30, 2018,] Wal-Mart Stores, [removed: Inc., Toys “R” Us,] Inc. and Target [removed: Corporation,] [added: Corporation] accounted for approximately [removed: 19%, 9%] [added: 20%] and 9%, respectively, of our consolidated net revenues and our five largest [removed: customers, including Wal-Mart, Toys “R” Us and Target,] [added: customers] in the aggregate accounted for approximately [removed: 42%] [added: 38%] of our consolidated net revenues.

In the U.S. and Canada segment, approximately [removed: 61%] [added: 60%] of the net revenues of the segment were derived from our top three customers.

As an example of this, the bankruptcy filing by [removed: Toys “R” Us] [added: Toys“R”Us] in the U.S. and Canada in September 2017, and [removed: associated reductions] in [removed: inventory taken by] [added: the United Kingdom in early 2018, and the subsequent liquidations of the] Toys “R” Us [removed: for the holiday season,] [added: business in many markets globally during 2018,] as well as the inability of [removed: Toys “R” Us] [added: Toys“R”Us] to pay certain outstanding receivables, significantly [removed: impacted] [added: reduced] our sales and profitability in the fourth quarter of [removed: 2017.][added: 2017 and throughout 2018.]

Any customer could reduce its overall purchase of our [removed: products,] [added: products] and reduce the number and variety of our products that it carries and the shelf space allotted for our products.

Furthermore, the bankruptcy or other lack of success of one or more of our [added: other] significant retail customers could negatively impact our revenues and profitability.

The ability to sell enough of these advanced products, at prices high enough to recoup our costs and make a profit, is constrained by heavy competition in consumer electronics and entertainment [removed: products,] [added: products] and can be further constrained by difficult economic conditions.

In addition, we developed and marketed products related to BUMBLEBEE, a motion picture developed and released by us working with our partner Paramount Pictures.

In 2018, for example, our NERF branded products faced significantly increased competition from both newer entrants into the blaster space, as well as private label offerings from major retailers.

A number of these competitors sought to gain market share by offering products with less innovation than our products at price points below our products, particularly by offering blasters in the under $20 retail price range.

_Our success depends on our ongoing ability to successfully evolve our capabilities and business to meet the challenges of a changing retail landscape and to successfully develop new aspects of our business_

2018 was a year of significant retail disruption in our industry.

Our future success depends on our ability to continue evolving and transforming our business to address a changing global consumer landscape and retail environment, one in which online shopping accounts for an increasing percentage of total sales to consumers, digital first marketing is critical to garner and develop consumer interest, ecommerce focused companies like Amazon.com, Inc. are now among our largest customers, traditional brick and mortar retailers face challenges to their businesses from the disintermediation caused by the expanding prevalence of online shopping, and the presence of specialty toy retailers has been significantly reduced in many of our markets due to bankruptcies, such as that of Toys “R” Us, potentially reducing, at least in the shorter term, physical shelf space available to offer family entertainment properties.

These market conditions require that we drive a digital-first orientation throughout our Company, adapt the way we produce and distribute our products to meet the needs of ecommerce retailers, and continue developing alternate retail channels to reach our consumers and recapture shelf space lost by specialty retailers.

In addition to successfully driving our business in a changing retail landscape, our future success depends on developing new areas of our business.

A prime example of that is our initiative to drive our MAGIC: THE GATHERING brand through digital gaming and esports.

We have invested considerable time and resources in our MAGIC: THE GATHERING Arena online game, which is currently in open beta, and our MAGIC: THE GATHERING esports initiative.

Those initiatives require different skills, investments and business strategies than more traditional areas of our business and our ability to successfully and profitably develop and deploy those skills and strategies, and drive those businesses, will be a major factor in achieving future success for our Company.

Similarly, our expenses can be

These challenges can be exacerbated if our customers accumulate excess retail inventories over time due to their purchases of our products exceeding sales of those products to ultimate consumers.

It can then take us significant time, working with our retailers, to reduce those excess retail inventories, and in the interim our sales of new products can be negatively impacted.

Our business in Europe in 2018 was significantly reduced by excess retail inventories that we needed to address during the year.

In 2018 we experienced a negative impact to our business from retailers’ continuing efforts to reduce the amount of overall inventory they carry and minimize carry-forward inventory coming out of the holiday season.

Additionally, some retailers are increasing their use of automated inventory replenishment programs, which we believe drove a significant reduction in reorders of our products by these retailers in the last weeks of December 2018.

These trends negatively impacted our sales in 2018.

If retailers continue to increase their use of automated replenishment programs, our inventory levels and sales may fluctuate, particularly in the fourth quarter.

The liquidation of millions of units of retail inventory held by Toys“R”Us into the market at closeout prices had a more substantial negative impact to sales of new products by us in 2018 than we, and industry experts, had initially expected in early 2018.

for our other products.

To date tariffs have not had a material adverse impact to our overall business, and the only market in which we face significant tariffs currently is in Brazil, where substantial import tariffs have been in place and do negatively impact our ability to price our products competitively while remaining profitable.

However, if tariffs were to be imposed on substantial quantities of our products, such as if the United States were to impose tariffs on substantial quantities of our products manufactured in China and imported into the United States, that could have a material negative impact on our business and damage our sales and profitability, and take time to offset.

We have been working over the last several years to reduce our reliance on manufacturing in China, such as by moving production of certain products to facilities in other countries like India, Vietnam and Mexico, as well as by increasing production of our products in other markets, including in the United States.

We plan to continue those efforts in future years, but there is no guarantee we will be as successful in these efforts as we plan.

Furthermore, many of these newer production facilities, such as in India and Vietnam, raise other risks in that we are working with vendors who have not been manufacturing products like ours for as long as historical vendors in China.

That means these new vendors must successfully develop the capability to manufacture our products to the quality and safety standards we require.

We recognize the need to provide immersive game play that is easy for

In 2018, in response to the continuing evolution of the global consumer landscape, shopping behaviors and the retail environment, we took certain actions as part of our ongoing efforts to transform and reimagine our business, to strengthen our connections with audiences and consumers, and enhance our ability to continue bringing meaningful brand experiences to life.

These actions, defined earlier in this 10-K as the 2018 restructuring program, included a commercial reorganization as well as adding new capabilities based on our understanding of changing consumer behaviors and how our retailers are going to market, while also changing many of the ways we organize across our brand blueprint.

The actions also included headcount reductions aimed at right-sizing our cost-structure.

Under the plan, we incurred pre-tax restructuring charges of $17.3 million in the first quarter of 2018, and $72 million in the fourth quarter of 2018 relating to severance and other employee costs.

Once these actions are completed, we expect that we will generate approximately $70 million to $80 million in gross annualized cost-reductions by 2020.

The Company expects that approximately $65 million of these gross savings will be realized in 2019.

In line with the objectives of this program, we plan to reinvest approximately $10 to $15 million in new resources in 2019, generating a net savings of approximately $50 million to $55 million in 2019.

However, there is no guarantee that our restructuring actions will deliver the cost-reductions we currently estimate or that our ongoing efforts to evolve our business will be as successful as we plan.

In 2018, based on estimates of future revenue from these rights, we recorded an impairment charge of $31.3 million.

However, in 2018, we did not borrow under our commercial paper program or revolving credit facility.

markets.

In June of 2018 we acquired the POWER RANGERS brand from Saban Properties as we believe this brand has the potential to be developed successfully around our brand blueprint.

Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in millions of dollars or shares, except for per share amounts.

But this focus also means that our future success

2, SPIDERMAN: HOMECOMING, THOR:RAGNOROK and STAR WARS: THE LAST JEDI.

As an example, in the fourth quarter of 2017 our sales of products related to STAR WARS: THE LAST JEDI were significantly below our expectations and that was a factor that caused us to miss our revenue expectations for that quarter.

investment at risk.

consumers.

In addition to the need to successfully anticipate and serve different

we will fail to achieve tight and compressed shipping schedules, which also may reduce our sales and harm our financial performance.

We expect the ongoing financial situation with Toys “R” Us, including its difficulties in the United Kingdom, will negatively impact our sales in 2018, with the greatest amount of that impact likely to be in the first half of 2018, and potentially for additional periods, based on the level of store closures and how much the sales lost through Toys “R” Us are picked up by other retail and e-commerce channels.

As a result, we can face increased risk of not achieving sales

In addition, our financial covenants were set at the time we entered into our credit facility.

Our performance and financial condition may not meet our original expectations, causing us to fail to meet such financial covenants.

products were found to not comply with such regulations.

our business.

The Tax Act makes broad and complex changes to the U.S. tax code that affected 2017, including the requirement for the Company to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years.

The Tax Act also established new tax laws that will affect 2018 and future years, including, but not limited to, (i) reducing the U.S. federal corporate tax rate from 35 to 21 percent; (ii) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (iii) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (iv) creating a new limitation on deductible interest expense; and (v) imposing limitations on the deductibility of certain executive compensation.

The Tax Act requires complex computations to be performed, significant judgments to be made in interpretation of the provisions of the Tax Act and significant estimates in calculations, and the preparation and analysis of information not previously relevant or regularly produced by the Company.

The U.S. Treasury Department, the Internal Revenue Service, and other standard-setting bodies could interpret or issue guidance on how provisions of the Tax Act will be applied or otherwise administered, with a possible retroactive effect, which is different from our interpretation.

As we complete our analysis of the Tax Act, collect and prepare necessary data, and interpret any additional guidance, we may make adjustments to provisional amounts that we have recorded that may materially impact our provision for income taxes in the period in which the adjustments are made.

While we did not recognize any goodwill impairment charges in 2017, during the fourth quarter of 2016, in conjunction with the Company’s annual review for impairment, the Company recognized an impairment charge of $32.9 million related to Backflip Studios reducing the related goodwill to $86.3 million.

In the future, should Backflip Studios not achieve its profitability and growth targets, including anticipated game releases in 2018 and beyond, the carrying value may become further impaired, resulting in additional impairment charges.

The following discussion should be read in conjunction with the audited consolidated financial statements of the Company included in Part [removed: II] [added: II,] Item 8 of this [removed: document.][added: Form 10-K.]

See [added: “Statement Regarding Forward-Looking Statements” and Part I,] Item 1A [removed: “Forward-Looking Information and Risk] [added: “Risk] Factors [removed: That May Affect Future Results”] [added: ”] for a discussion of other uncertainties, risks and assumptions associated with these statements.

The Company strives to do this through deep consumer [removed: engagement and] [added: engagement,] the [added: application of consumer insights, the use of immersive storytelling to build brands, product innovation and development of global business reach.]

Hasbro applies these principles to leverage its beloved owned and controlled brands, including Franchise Brands BABY [removed: ALIVE (beginning in 2018),] [added: ALIVE,] MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS, [added: Emerging Brands POWER RANGERS and LITTLEST PET SHOP,] as well as [added: the brands of our partners included in our] Partner [removed: Brands.][added: Brands portfolio.]

The Company’s [removed: wholly-owned Hasbro Studios and its film] [added: entertainment] labels, [removed: AllSpark] [added: Allspark] Pictures and Allspark Animation, create [removed: entertainment brand-driven] [added: entertainment-driven brand] storytelling across mediums, including television, film, digital and more.

The Company has also included in this [removed: report] [added: report,] the impact of [added: intangible asset and goodwill impairments, organizational restructuring charges, the Toys“R”Us bankruptcy and] U.S. tax reform, passed in December 2017, on [added: 2018 and 2017] net earnings, as well as earnings per share.

| | • | | Franchise Brands [removed: and] [added: net revenues grew 13%;] Hasbro Gaming net revenues [removed: each] grew 10%; Emerging Brands net revenues [removed: increased 2%;] [added: declined 15%;] and Partner Brands revenues declined 10%. |

| | • | | U.S. tax reform, passed in December 2017, resulted in a net charge of $296.5 million including a one-time repatriation tax payable over eight years. [removed: See Note 22, “Subsequent Event,” for disclosure of additional tax guidance related to the Tax Act.] |

| | • | | [removed: 2016 earnings were negatively impacted by the post-tax] [added: Net charge of] $14.7 million, or $0.12 per diluted [removed: share] [added: share, due to a $32.9 million] non-cash goodwill impairment [removed: charge, related to] [added: charge on] the Company’s [removed: investment in Backflip.] [added: Backflip investment.] |

| | • | | [removed: 2016 net revenues grew in all major operating segments: 15% in the] U.S. and Canada [removed: segment; 11% in the] [added: segment net revenues declined 10%;] International [removed: segment,] [added: segment net revenues declined 17%,] including an unfavorable foreign currency translation impact of [removed: $58.4] [added: $41.7] million; [removed: and 8% in the] Entertainment and Licensing [removed: segment.] [added: segment net revenues increased 5%.] |

Hasbro increased the quarterly dividend rate from [removed: $0.57] [added: $0.63] per share in [removed: 2017] [added: 2018] to [removed: $0.63] [added: $0.68] per share in [removed: 2018 which will be] [added: 2019, with this increase first being] effective for the dividend payable in May [removed: 2018.][added: 2019.]

This was the [removed: fourteenth] [added: fifteenth] dividend increase in the previous [removed: 15] [added: 16] years.

During that period, the Company has increased the quarterly cash dividend from $0.03 to [removed: $0.63] [added: $0.68] per share.

In addition to the dividend, the Company returns cash [added: to shareholders] through its share repurchase program.

As part of this initiative, from 2005 to [removed: 2015,] [added: 2018,] the Company’s Board of Directors adopted [removed: eight] [added: nine] successive share repurchase authorizations with a cumulative authorized repurchase amount of [removed: $3,825.0] [added: $4,325.0] million.

The [removed: eighth] [added: ninth] authorization was approved in [removed: February 2015] [added: May 2018] for $500 million.

During [removed: 2017,] [added: 2018,] Hasbro repurchased approximately [removed: 1.6] [added: 2.7] million shares at a total cost of [removed: $150.1] [added: $250.1] million and an average price of [removed: $94.74] [added: $94.15] per share.

Since 2005, Hasbro has repurchased [removed: 105.5] [added: 107.9] million shares at a total cost of [removed: $3,647.0] [added: $3,899.8] million and an average price of [removed: $34.80] [added: $36.11] per share.

At December [removed: 31, 2017,] [added: 30, 2018,] Hasbro had [removed: $178.0] [added: $428.0] million remaining available under these share repurchase authorizations.

The following table provides a summary of the Company’s condensed consolidated results as a percentage of net revenues for [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015.][added: 2016.]

| | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Operating profit | | | [removed: 15.6] [added: 7.2] | | | | [removed: 15.7] [added: 15.6] | | | | [removed: 15.6] [added: 15.7] | |

| Earnings before income taxes | | | [removed: 15.1] [added: 5.9] | | | | [removed: 13.8] [added: 15.1] | | | | [removed: 13.6] [added: 13.8] | |

| Net earnings | | | [removed: 7.6] [added: 4.8] | | | | [removed: 10.6] [added: 7.6] | | | | [removed: 10.0] [added: 10.6] | |

| Net earnings attributable to Hasbro, Inc. | | | [removed: 7.6] [added: 4.8] | % | | | [removed: 11.0] [added: 7.6] | % | | | [removed: 10.2] [added: 11.0] | % |

The fiscal [removed: year ended December 31, 2017 was a fifty-three week period while the fiscal] years ended December [removed: 25, 2016] [added: 30, 2018] and December [removed: 27, 2015] [added: 25, 2016] were each fifty-two week [removed: periods.][added: periods while the year ended December 31, 2017 was a fifty-three week period.]

Net earnings attributable to Hasbro, Inc. decreased to [removed: $396.6] [added: $220.4] million for the fiscal year ended December [removed: 31, 2017] [added: 30, 2018] compared to [removed: $551.4] [added: $396.6] million for the fiscal year ended December [removed: 25, 2016,] [added: 31, 2017,] and were [removed: $451.8] [added: $551.4] million for the fiscal year ended December [removed: 27, 2015.][added: 25, 2016.]

The Company consolidated the financial results of Backflip in its consolidated financial statements and, accordingly, the Company’s reported revenues, costs and expenses, assets and liabilities, and cash flows included 100% of Backflip, with the 30% noncontrolling interests share reported as net loss attributable to noncontrolling interests in the consolidated statements of operations and redeemable noncontrolling interests on the consolidated balance [added: sheets.]

Diluted earnings per share attributable to Hasbro, Inc. were [removed: $3.12] [added: $1.74] in [removed: 2017, $4.34] [added: 2018, $3.12] in [removed: 2016] [added: 2017] and [removed: $3.57] [added: $4.34] in [removed: 2015.][added: 2016.]

Net earnings and diluted earnings per share attributable to Hasbro, Inc. for each fiscal year in the three years ended December [removed: 31, 2017] [added: 30, 2018] include certain charges and benefits as described below.

Consolidated net revenues for the year ended December [removed: 31, 2017 grew 4%] [added: 30, 2018 declined 12%] to [removed: $5,209.8] [added: $4,579.6] million from [removed: $5,019.8] [added: $5,209.8] million for the year ended December [removed: 25, 2016.][added: 31, 2017.]

[removed: Net] [added: Consolidated net] revenues [removed: in] [added: for the year ended December 31,] 2017 [removed: include] [added: grew 4% to $5,209.8 million from $5,019.8 million for the year ended December 25, 2016 and included] a favorable foreign currency translation of $79.2 million, which [removed: is] [added: was] the result of stronger currencies across our [removed: international] [added: International] segment in 2017 compared to 2016.

In 2017, net revenues from Franchise Brands grew [removed: 10%] [added: 13%] compared to 2016 and comprised [removed: 49%] [added: 47%] of consolidated net revenues.

Growth in Franchise Brands TRANSFORMERS, NERF, [removed: MONOPLY] [added: MONOPOLY, BABY ALIVE] and MY LITTLE PONY was partially offset by declines in [removed: LITTLEST PET SHOP,] PLAY-DOH and, to a lesser extent, MAGIC: THE GATHERING.

Absent the impact of foreign currency translation, [removed: consolidated] [added: International segment] net revenues [removed: grew 14%] [added: decreased 15%] in [removed: 2016] [added: 2018] compared to [removed: 2015.][added: 2017.]

In [removed: 2016,] [added: 2018,] net revenues from Franchise Brands [removed: grew 2%] [added: declined 9%] compared to [removed: 2015] [added: 2017] and comprised [removed: 46%] [added: 53%] of consolidated net revenues.

Growth in Franchise Brands [removed: NERF, PLAY-DOH] [added: MONOPOLY] and MAGIC: THE GATHERING was [removed: partially] [added: more than] offset by declines [removed: in Franchise Brands LITTLEST PET SHOP,] [added: from NERF,] MY LITTLE PONY, [removed: MONOPLY and TRANSFORMERS.][added: TRANSFORMERS, PLAY-DOH and, to a lesser extent, BABY ALIVE.]

The following chart presents net revenues by brand portfolio for each year in the three years ended December [removed: 31, 2017.][added: 30, 2018.]

| | | [removed: 2017] [added: 2018] Net Revenues | | | | % Change | | | | [removed: 2016] [added: 2017] Net Revenues | | | | % Change | | | | [removed: 2015] [added: 2016] Net Revenues | | | | % Change | | |

| Partner Brands | | | [removed: 1,271.6] [added: 987.3] | | | | [removed: \-10.0] [added: \-22.4] | % | | | [removed: 1,412.8] [added: 1,271.6] | | | | [removed: 28.3] [added: \-10.0] | % | | | [removed: 1,101.3] [added: 1,412.8] | | | | [removed: 68.4] [added: 28.3] | % |

As the global consumer landscape, shopping behaviors and the retail environment continue to evolve, the Company continues to transform and reimagine its business strategy.

This transformation includes changing many of the ways Hasbro organizes across its brand blueprint, re-shaping the Company to become a better equipped and adaptive, digitally-driven organization, including investing in the development of an omni-channel retail presence.

In 2018, the Company has also focused on adding new capabilities through the on-boarding of new skill sets and talent to lead in today’s converged retail environment based on Hasbro’s understanding of the consumer and how its retailers are going to market.

_2018 highlights_

| | • | | Net revenues of $4,579.6 million decreased 12% from $5,209.8 million in 2017. The decline in net revenues includes an unfavorable foreign currency translation of $43.0 million. |

| | • | | Franchise Brands net revenues declined 9%, Partner Brands net revenues declined 22%, Hasbro Gaming net revenues declined 12% and Emerging Brands net revenues increased 1%. |

| | • | | Operating profit was $331.1 million, or 7.2% of net revenues in 2018 compared to operating profit of $810.4 million, or 15.6% of net revenues in 2017. |

| | • | | 2018 operating profit was negatively impacted by: non-cash goodwill and intangible asset impairment charges of $117.6 million related to goodwill from the Company’s acquisition of Backflip Studios and other intangible assets; severance costs of $89.3 million associated with previously announced organizational restructuring; and $60.4 million of costs related to the Toys“R”Us bankruptcy recorded during the year. |

| | • | | Impact from U.S. tax reform resulted in a net charge of $40.7 million in 2018 due to the remeasurement of liabilities based on additional guidance and regulations issued in 2018. |

| | • | | Net earnings attributable to Hasbro, Inc. declined in 2018 to $220.4 million, or $1.74 per diluted share, compared to $396.6 million, or $3.12 per diluted share in 2017. |

| | • | | 2017 operating profit was negatively impacted by the Toys“R”Us bankruptcy in the U.S. and Canada as a result of incremental bad debt expense recorded during the third quarter of 2017. |

_2018_

| | • | | A net charge of $96.9 million or $0.76 per diluted share associated with a fourth quarter 2018 non-cash goodwill impairment charge related to the Company’s Backflip Studios goodwill and impairment of certain other definite-lived intangible assets. |

| | • | | A net charge of $77.9 million or $0.61 per diluted share of severance costs associated with a previously announced organizational restructuring. In the first quarter of 2018, the Company incurred a net charge of $15.7 million of severance charges, and in the fourth quarter of 2018, the Company recorded an additional net charge of $62.2 million of severance charges related to actions associated with its 2018 restructuring program. |

| | • | | A net charge of $52.8 million or $0.42 per diluted share related to the Toys“R”Us bankruptcy and liquidation of its U.S. and other operations around the globe. The Company recognized incremental bad debt expense on outstanding Toys“R”Us receivables, royalty expense, inventory obsolescence as well as other related costs. In the fourth quarter of 2018, based on its final settlement with Toys“R”Us, the Company made adjustments to charges previously recorded during 2018. |

| | • | | A net charge of $40.7 million or $0.32 per diluted share related to U.S. tax reform. In 2018 the Company made adjustments to provisional U.S. Tax Reform amounts recorded in the fourth quarter of 2017, based on additional guidance issued by the U.S. Treasury Department and the Internal Revenue Service during 2018. |

Net revenues in 2018 include an unfavorable foreign currency translation of $43.0 million, which is the result of weakening currencies primarily in our International segment in 2018 compared to 2017.

| Franchise Brands | | $ | 2,445.9 | | | | \-9.1 | % | | $ | 2,690.4 | | | | 13.3 | % | | $ | 2,375.3 | | | | 5.4 | % |

| Emerging Brands | | | 358.8 | | | | 1.1 | % | | | 354.8 | | | | \-15.2 | % | | | 418.4 | | | | \-2.7 | % |

_2018 versus 2017_

Higher net revenues from MONOPOLY and MAGIC: THE GATHERING products were more than offset by net revenue declines from NERF products, which were impacted by the loss of sales related to the bankruptcy and subsequent liquidation of Toys“R”Us.

Also contributing to Franchise Brands net revenue declines in 2018 were MY LITTLE PONY products,

supported in 2017 by the theatrical release of _MY LITTLE PONY: THE MOVIE,_ TRANSFORMERS products, also supported in 2017 by the major theatrical release of _TRANSFORMERS: THE LAST KNIGHT,_ and to a lesser extent, BABY ALIVE products_._

_Partner Brands_ The Partner Brands portfolio declined 22% in 2018 compared to 2017.

Lower net revenues from STAR WARS, DISNEY PRINCESS and DREAMWORKS’ TROLLS products, as well as net revenue declines from DISNEY FROZEN and DISNEY’S DECENDANTS products were partially offset by net revenue increases from BEYBLADE and MARVEL products in addition to contributions from new brands TOP WING and SUPER MONSTERS products in 2018.

In 2018, STAR WARS products were supported by the second quarter 2018 major theatrical release _SOLO_: A _STAR WARS STORY_.

_Hasbro Gaming_ The Hasbro Gaming portfolio declined 12% in 2018 compared to 2017.

Lower net revenues from PIE FACE and SPEAK OUT and certain other Hasbro Gaming products were partially offset by net revenue increases from DUNGEONS and DRAGONS, DON’T STEP IN IT, CONNECT 4 and JENGA products.

Net revenue contributions from the introduction of Hasbro’s new collectable product lines of LOST KITTIES and YELLIES products, as well as contributions from POWER RANGERS licensing revenues, were partially offset by net revenue declines from FURREAL FRIENDS, FURBY and the Company’s core PLAYSKOOL products.

_2018 versus 2017_

Segment net revenues declined in all product categories including Franchise Brands, Partner Brands and Hasbro Gaming, and to a lesser extent, net revenues declined in the Emerging Brands portfolio.

These declines were partially offset by net revenue increases from BEYBLADE and MARVEL products in addition to net revenue contributions from the introduction of the Company’s TOP WING and SUPER MONSTERS products during 2018.

_2018 versus 2017_

International segment net revenues decreased approximately 17% in 2018 compared to 2017 which includes an unfavorable foreign currency translation of $41.7 million (Latin America — $31.2 million, Europe — $9.0 million, Asia Pacific — $1.5 million).

On a regional basis, net revenues from Europe declined 24%, Latin America declined 6% while net revenues from the Company’s Asia Pacific region declined 5% in 2018 from 2017.

Net Revenues in emerging markets decreased 12% during 2018.

These net revenue declines were partially offset by net revenue increases from MONOPOLY products.

_2018 versus 2017_

Increased television programming and movie revenues, primarily recognized for content delivered under a multi-year digital

streaming deal entered in the third quarter of 2018, as well as higher full-year revenues due to the adoption of ASC 606 as discussed in note 2 to our consolidated financial statements which are included in Part II, Item 8 of this Form 10-K, drove the increase in 2018.

application of consumer insights, the use of immersive storytelling to build brands, product innovation and development of global business reach.

| | • | | 2017 earnings were negatively impacted by a net charge of $296.5 million, or $2.33 per diluted share, related to U.S. tax reform |

_2016 highlights_

| | • | | Net revenues grew 13% to $5,019.8 million in 2016 from $4,447.5 million in 2015. Absent unfavorable foreign currency translation of approximately $61.0 million, 2016 net revenues grew 14% compared to 2015. |

| | • | | Net revenues grew in all brand portfolios, Partner Brands growth of 28%; Hasbro Gaming growth of 23%; Emerging Brands growth of 17% and Franchise Brands growth of 2%. |

| | • | | 2016 operating profit improved 14% in 2016 compared to 2015 while net earnings attributable to Hasbro, Inc. increased 22% to $551.4 million compared to $451.8 million in 2015. |

sheets.

| | • | | Post-tax charge of $14.7 million, or $0.12 per diluted share, due to a $32.9 million non-cash goodwill impairment charge on the Company’s Backflip investment. |

_2015_

| | • | | Benefit, net of tax, of $6.9 million, or $0.05 per diluted share, related to a gain on the sale of the Company’s manufacturing operations in East Longmeadow, MA and Waterford, Ireland. |

Consolidated net revenues for the year ended December 25, 2016 grew 13% to $5,019.8 million from $4,447.5 million for the year ended December 27, 2015 and were impacted by unfavorable foreign currency translation of $61.0 million as a result of the stronger U.S. dollar in 2016 compared to 2015.

| Franchise Brands | | $ | 2,568.0 | | | | 10.3 | % | | $ | 2,327.7 | | | | 1.9 | % | | $ | 2,285.4 | | | | \-2.5 | % |

| Emerging Brands | | | 477.2 | | | | 2.4 | % | | | 466.0 | | | | 16.9 | % | | | 398.5 | | | | \-37.2 | % |

Beginning in 2018, BABY ALIVE will be included as a Franchise Brand and LITTLEST PET SHOP will be included in Emerging Brands.

Beginning in 2018 BABY ALIVE will be included as a Franchise Brand and LITTLEST PET SHOP has moved into Emerging Brands to allow for further innovation.

_2016 versus 2015_

Contributing to 2016 revenue growth were the introduction of several new product lines including: Hasbro’s line of DISNEY PRINCESS and DISNEY FROZEN fashion and small dolls, DREAMWORKS’ TROLLS products and YO-KAI WATCH products.

In 2016, products related to three Partner Brands were supported by major theatrical releases – STAR WARS was supported by _STAR WARS: THE FORCE AWAKENS_ released during the fourth quarter of 2015, along with the December 2016 release, _ROGUE ONE: A STAR WARS STORY_, MARVEL was supported by the May 2016 release of _CAPTAIN AMERICA: CIVIL WAR_ and the DREAMWORKS’ TROLLS brand was supported by the theatrical release, _TROLLS_ in November 2016.

_Hasbro Gaming_ The Hasbro Gaming portfolio grew 23% in 2016 compared to 2015.

Higher net revenues resulted from PIE FACE, SIMON, BOP-IT, YAHTZEE, TRIVIAL PURSUIT, CLUE and other Hasbro Gaming products as well as the successful launch of the SPEAK-OUT game in 2016.

These higher net revenues were marginally offset by lower net revenues from TROUBLE, TWISTER and ELEFUN & FRIENDS products as well as lower net revenues from OPERATION and SCRABBLE products.

_Emerging Brands_ The Emerging Brands portfolio grew 17% in 2016 compared to 2015.

_2016 versus 2015_

Segment net revenues grew in all categories during 2016.

well as the introduction of YO-KAI WATCH products were only partially offset by lower net revenues from JURASSIC WORLD, MARVEL and SESAME STREET products.

International segment net revenues increased approximately 11% in 2016 compared to 2015.

Net revenues grew in all regions.

Net revenues in Europe, Latin America and Asia Pacific increased 14%, 9% and 6%, respectively, in 2016 from 2015.

Revenues in emerging markets increased 9% in 2016.

In 2016, net revenues were impacted by unfavorable currency translation of approximately $58.4 million (Latin America — $37.4 million, Europe — $16.0 million, Asia Pacific — $5.0 million).

Absent the impact of foreign currency translation, International segment net revenues grew 14% in 2016 compared to 2015 and emerging markets increased 12%.

International segment net revenues grew in all product portfolios during 2016.

In the Franchise Brands portfolio, higher net revenues from NERF, PLAY-DOH and MAGIC: THE GATHERING products, and to a lesser extent, MY LITTLE PONY products, were partially offset by lower net revenues from MONOPOLY, LITTLEST PET SHOP and TRANSFORMERS products.

Higher segment net revenues were driven by higher revenues from Backflip, growth in the Consumer Products and Digital Gaming licensing groups, as well as contributions from Boulder Media which was acquired in July 2016.

Lower entertainment revenues in 2016 compared to 2015 reflect a multi-year digital distribution agreement for Hasbro Studios signed in 2015 which was not repeated in 2016.

Higher operating profit reflects higher net revenues discussed above and lower intangible amortization, partially offset by higher royalties, product development, advertising, and selling, distribution and administration expenses.

Operating profit margin improved to 20.4% of net revenues in 2016 from 19.4% of net revenues in 2015 reflecting higher revenues providing improved expense leverage.

Foreign currency translation did not have a material impact on U.S. and Canada operating profit in 2016.

Absent the impact of the favorable foreign currency translation, International segment operating profit grew 11%.

The increase in operating profit, as reported, is primarily due to the impact of higher net revenues, partially offset by higher expense levels, primarily royalties, advertising, and selling distribution and administration expenses.

The information required by this item is included in Item 7 of Part II of this [removed: Report] [added: Form 10-K] and is incorporated herein by reference.

We apply these principles to leverage our owned and controlled brands, including Franchise Brands [removed: LITTLEST PET SHOP,] [added: BABY ALIVE,] MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS, as well as [removed: for] [added: the brands of] our [added: partners included in our] Partner Brands portfolio.

[removed: The Company’s wholly-owned subsidiary Hasbro Studios LLC (“Hasbro Studios”) and its film] [added: Our entertainment] labels, Allspark Pictures and Allspark Animation, create [removed: entertainment brand-driven] [added: entertainment-driven brand] storytelling across mediums, including television, film and more.

[removed: These elements] [added: Each of these principles] are executed globally in alignment with our strategic plan, the brand blueprint.

Our brand blueprint focuses on reinforcing storylines associated with our brands through several [removed: outlets,] [added: mediums,] including television, motion pictures and digital content.

[removed: Hasbro Studios is] [added: Allspark Pictures and Allspark Animation are] responsible for [removed: brand-driven storytelling across mediums,] [added: entertainment-driven brand storytelling,] including the development and global distribution of television programming [added: and motion pictures] primarily based on our brands.

[removed: This] [added: Television] programming [added: based on our brands] currently airs in markets throughout the world.

Domestically, [removed: Hasbro Studios] [added: Allspark Animation] primarily distributes programming to Discovery Family Channel (the “Network”), a joint venture between Discovery Communications, Inc. (“Discovery”) and [removed: ourselves] [added: Hasbro] which operates a cable television network in the United States dedicated to high-quality children’s and family entertainment and educational programming.

[added: Beginning in 2015, Allspark Animation began distributing certain] programming domestically to other outlets, including Cartoon Network.

Internationally, [removed: Hasbro Studios] [added: Allspark Animation] distributes to various broadcasters and cable networks.

[removed: Hasbro Studios] [added: Allspark Animation] also distributes programming globally on various digital platforms, including Netflix and iTunes.

In addition to working on a variety of projects for [removed: Hasbro Studios,] Allspark Animation and Allspark Pictures, Boulder Media continues to produce non-Hasbro content under the Boulder name.

Our plan [removed: going forward] is to [added: continue to] produce live action entertainment, including film and television, under the Allspark Pictures moniker, and to produce animated entertainment under the Allspark Animation label.

Hasbro’s Allspark Pictures and Allspark Animation will play an active role alongside Paramount in content development and production under this relationship and [removed: we] [added: Hasbro] will play a more significant role in financing the films as well.

[added: | | • | |] In October 2016, Allspark Pictures released [removed: _OUIJA:] [added: OUIJA:] ORIGIN OF [removed: EVIL_.][added: EVIL. |]

[added: | | • | |] In October 2017, Allspark Pictures released [removed: _MY] [added: MY] LITTLE PONY: THE [removed: MOVIE_.][added: MOVIE. |]

[added: | | • | |] In December 2018, [removed: through their partnership,] Hasbro and Paramount [removed: expect to release _BUMBLEBEE_,] [added: released BUMBLEBEE,] a film centered on the TRANSFORMERS character, BUMBLEBEE. [added: |]

While certain of our trademarks, characters and other property rights are licensed by third parties in connection with digital gaming, we anticipate increasingly leveraging and applying Backflip’s digital gaming expertise to Hasbro brands in [removed: 2018] [added: 2019] and beyond.

As we seek to grow our business in entertainment, licensing, digital gaming and innovative product offerings, we will continue to evaluate strategic alliances, acquisitions and investments, like [removed: Hasbro Studios,] [added: Allspark Animation and Allspark Pictures,] Boulder Media, the Network and Backflip, which may allow us to strengthen our competencies around the brand blueprint, such as in storytelling and digital, complement our current product offerings, allow us entry into areas which are adjacent or complementary to our existing business, allow us to add to our brand portfolio, or allow us to further develop awareness of our brands and expand the ability of consumers to experience our brands in different forms and formats.

Hasbro organizes and markets owned, controlled and licensed intellectual properties within our brand architecture under the following [added: four] brand portfolios: (1) Franchise Brands; (2) Partner Brands; (3) Hasbro Gaming; and (4) Emerging Brands.

[removed: In 2017 our] [added: Our] seven Franchise Brands [removed: were LITTLEST PET SHOP,] [added: are BABY ALIVE,] MAGIC: THE GATHERING, MONOPOLY, MY LITTLE PONY, NERF, PLAY-DOH and TRANSFORMERS.

In [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] Franchise Brands were [removed: 49%, 46% and] [added: 53%,] 52% [added: and 47%] of total net revenues, respectively.

_Partner Brands_ Partner Brands include those [removed: licensed] brands [added: licensed by Hasbro from other parties] for which Hasbro develops toy and game products.

Significant Partner Brands include MARVEL, including SPIDER-MAN and THE AVENGERS, STAR WARS, DISNEY PRINCESS and DISNEY FROZEN, DISNEY‘S DESCENDANTS, BEYBLADE, DREAMWORKS’ [removed: TROLLS, SESAME STREET] [added: TROLLS] and [removed: YO-KAI WATCH.][added: SESAME STREET.]

In 2017, Hasbro sold [removed: product lines] [added: products] supported by the [removed: following] [added: four] theatrical releases from our [removed: partners:] [added: partners_:] Marvel’s [removed: _GUARDIANS] [added: GUARDIANS] OF THE GALAXY VOL.

2_ in May, _SPIDER-MAN: HOMECOMING_ in July, _THOR: RAGNAROK_ in November and _STAR WARS: THE LAST JEDI_ in [removed: December in addition to films featuring our Franchise Brands][added: December.]

Hasbro Gaming includes brands such as [added: CONNECT 4,] DUNGEONS & DRAGONS, JENGA, THE GAME OF LIFE, OPERATION, [removed: PIE FACE,] SCRABBLE, TRIVIAL PURSUIT and TWISTER as well as [added: new] social games including [removed: FANTASTIC GYMNASTICS, SPEAK OUT] [added: DON’T LOSE YOUR COOL, DON’T STEP IN IT,] and [removed: TOILET TROUBLE;] [added: SPEECH BREAKER;] in addition, Hasbro’s games portfolio also includes many other well-known game brands.

The Emerging Brands portfolio also includes new brands [added: such as LOST KITTIES, YELLIES, as well as brands currently] being developed by the [removed: Company, as well as] [added: Company and] other brands not captured in our other three categories.

The Entertainment and Licensing segment conducts our movie, television and digital gaming entertainment operations, including the operations of [removed: Hasbro] [added: Allspark Pictures, Allspark Animation, Boulder] Studios and Backflip as well as engages in the out-licensing of our trademarks, characters and other brand and intellectual property rights to third parties for digital gaming and consumer products.

Financial information with respect to [removed: our segments and geographic areas] [added: foreign currency risk management] is included in [removed: Note 20] [added: note 17] to our consolidated financial statements, which are included in [added: Part II,] Item 8 of this Form 10-K.

In addition to growing brands, leveraging opportunistic product lines and driving our licensed business, we seek to grow our international business by continuing to [removed: opportunistically] [added: strategically] expand into emerging markets in Eastern Europe, Asia, Africa and Latin and South America.

Net revenues from emerging markets represented 14% of our total consolidated net revenues in [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015.][added: 2016.]

In [removed: 2017,] [added: 2018,] net revenues from emerging markets [removed: increased 5%] [added: decreased 12%] while in [removed: 2016,] [added: 2017,] net revenues in emerging markets increased [removed: 9%] [added: 5%] from [removed: 2015.][added: 2016.]

In [removed: 2017, the international segment benefited from foreign currency translation whereas] [added: 2018,] the strengthening of the U.S. dollar [removed: in 2016] [added: against many of the foreign currencies within the Company’s International segment] had a negative impact [removed: on] [added: whereas in 2017,] the International [removed: segment.][added: segment benefited from foreign currency translation.]

The impact from foreign currency translation on International segment net revenues as compared to the prior year translation rates for 2017 and 2016 was [removed: $75.3] [added: $(43.0)] million and [removed: $(58.4)] [added: $75.3] million, respectively.

[removed: Financial information with respect to foreign currency risk management is included in Note 16] [added: For further discussion, see note 5] to our consolidated financial statements, which are included in [added: Part II,] Item 8 of this Form 10-K.

[removed: Each] [added: Three] of our four product categories, namely Franchise Brands, Partner [removed: Brands, Hasbro Gaming] [added: Brands] and [removed: Emerging Brands,] [added: Hasbro Gaming,] generate approximately 10% or more of our net revenues.

For more information, including the amount of net revenues attributable to each of our four product categories, see Note [removed: 20] [added: 21] to our consolidated financial statements, which are included in [added: Part II,] Item 8 of this Form 10-K.

Our customer order patterns may vary from year to year largely due to fluctuations in the degree of consumer acceptance of product lines, product availability, marketing strategies and inventory policies of retailers, the dates [added: of theatrical releases of major motion pictures for which we offer products, and changes in overall economic conditions.]

As such, a disproportionate volume of our net revenues [removed: are] [added: is] earned during the third and fourth quarters leading up to the retail industry’s holiday selling season, including Christmas.

Although the Company may receive orders from customers in advance, it is general industry practice that these orders are subject to amendment or cancellation by customers prior to shipment and, as such, the Company does not believe that these unshipped orders, at any given date, are [added: necessarily] indicative of future sales.

As the global consumer landscape, shopping behaviors and the retail environment continue to evolve, we continue to transform and reimagine our business strategy.

This transformation includes changing many of the ways we organize across our brand blueprint, re-shaping us to become a better equipped and adaptive, digitally-driven organization, including investing in the development of an omni-channel retail presence.

In 2018, we also focused on adding new capabilities through the on-boarding of new skill sets and talent to lead in today’s converged retail environment based on our understanding of the consumer and how our retailers are going to market.

_Recent Events_

_POWER RANGERS Acquisition_

On June 12, 2018, Hasbro, Inc. acquired POWER RANGERS and other entertainment assets from Saban Properties (“POWER RANGERS Acquisition”).

The transaction was funded through a combination of cash and stock valued at $534 million.

Created by Haim Saban and launched in 1993, Mighty Morphin POWER RANGERS quickly became a pop culture phenomenon.

Today, POWER RANGERS is one of the longest running kids’ live-action series in television history with nearly 26 seasons and feature films.

Saban’s POWER RANGERS currently airs in 180 markets around the world and is translated into numerous languages.

Hasbro plans to incorporate the POWER RANGERS brand into its brand blueprint, through the manufacturing and sale of toys and games, media distribution of future developed television and movie content and licensing of the brand to consumer products licensors.

The first set of POWER RANGERS products from Hasbro will be available in spring 2019.

_2018 Restructuring Actions_

In 2018, in response to the continuing evolution of the global consumer landscape, shopping behaviors and the retail environment, Hasbro took certain actions as part of its ongoing efforts to transform and reimagine its business, to strengthen its connections with audiences and consumers, and enhance its ability to continue bringing meaningful brand experiences to life.

These actions, referred to as the 2018 restructuring program, included a commercial reorganization as well as adding new capabilities based on our understanding of changing consumer behaviors and how our retailers are going to market, while also changing many of the ways we organize across our brand blueprint.

We are committed to reimagining and redesigning our go-to-market strategy as we react to present-day industry trends, and progress into a more innovative and digitally-driven play and entertainment company.

The actions also included headcount reductions aimed at right-sizing the Company’s cost-structure.

Under the plan, the Company incurred pre-tax restructuring charges of $17.3 million in the first quarter of 2018, and $72 million in the fourth quarter of 2018 relating to severance and other employee costs.

Once these actions are completed, the Company expects that it will generate approximately $70 million to $80 million in gross annualized cost-reductions by 2020.

The Company expects that approximately $65 million of these gross savings will be realized in 2019.

In line with the objectives of this program, the Company plans to reinvest approximately $10 to $15 million in new resources in 2019, generating a net savings of approximately $50 million to $55 million in 2019.

_2018 Impairment Charges_

During the fourth quarter of 2018, the Company took a number of actions to react to a rapidly changing mobile gaming industry that resulted in a modification to the Company’s long-term plan for its Backflip business.

These modifications included organizational actions and related personnel changes, the extension of launch dates for games currently in or planned for development and the addition of partners for the development of future game releases.

The modifications resulted in changes to the long-term projections for the Backflip business which led the Company to conclude the goodwill associated with the Backflip reporting unit was impaired.

The Company recorded an impairment charge of $86.3 million within administrative expense and in the Company’s Entertainment and Licensing segment, for the year ended December 30, 2018.

The Company also concluded that certain intangible assets were also impaired during the fourth quarter of 2018.

These impairments were primarily the result of changes to revenue projections that became apparent after the recent holiday period.

This resulted in recording an impairment charge of $31.3 million recorded within administrative expense and in the Company’s Corporate and Eliminations segment, in the year ended December 30, 2018.

Recent films released by Allspark Pictures include the following:

| --- | --- | --- | --- |

| --- | --- | --- | --- |

| --- | --- | --- | --- |

Our wholly-owned subsidiary, Backflip Studios, LLC (“Backflip”), a mobile game developer, produces digital applications.

Hasbro’s products were also supported in 2017 by films featuring our Franchise Brands TRANSFORMERS: THE LAST NIGHT in June, and MY LITTLE PONY: THE MOVIE_._

In 2018, Hasbro product lines were supported by the following theatrical releases: _BLACK PANTHER_ in February, _AVENGERS: INFINITY WAR_ in April and _SPIDER-MAN: INTO THE SPIDER-VERSE_ in December.

In addition, Hasbro’s products were supported by the May release of _SOLO: A STAR WARS STORY_ as well as _BUMBLEBEE,_ a film featuring our Franchise Brand, TRANSFORMERS, in December 2018.

In 2019, Hasbro plans to sell products related to several expected partner theatrical releases, including _CAPTAIN MARVEL_ in March, _AVENGERS: END GAME_ in April, _SPIDER MAN: FAR FROM HOME_ in July and _STAR WARS: EPISODE IX_ in December.

To support the Company’s DISNEY PRINCESS and DISNEY FROZEN product lines, Hasbro plans to sell products related to _ALADDIN_, a theatrical release expected in May, and _FROZEN 2_ expected in November.

Hasbro Emerging Brands include brands such as LITTLEST PET SHOP, EASY BAKE, FURBY, FURREAL FRIENDS, PLAYSKOOL, and most recently, the POWER RANGERS brand, which we purchased in 2018.

Beginning in 2015, Hasbro Studios began distributing certain

During 2017 we formed Allspark Animation, an additional film label to expand our entertainment services.

As of December 2016, we owned a 70% majority stake in Backflip Studios, LLC (“Backflip”), a mobile game developer, and in January 2017, we increased our ownership to 100%.

As reported, net revenues from Franchise Brands grew 10% in 2017, and 2% in 2016.

Beginning in 2018, Emerging Brand BABY ALIVE will replace LITTLEST PET SHOP in the Franchise Brands line-up based on the historical strength of the BABY ALIVE brand and the Company’s belief in the sustainability of the brand’s success.

We are moving LITTLEST PET SHOP to the Emerging Brands category to allow us to take a more entrepreneurial approach to that brand and better allow us to re-invent that brand.

_TRANSFORMERS: THE LAST KNIGHT_ in June, and _MY LITTLE PONY: THE MOVIE_, in October.

In 2016, Hasbro sold product supported by four major motion picture releases by our partners: _CAPTAIN AMERICA: CIVIL WAR, DREAMWORKS’ TROLLS, MOANA_ and _ROGUE ONE: A STAR WARS STORY_.

In 2018, we expect to sell products related to several partner theatrical releases, including _BLACK PANTHER_ in February, _AVENGERS: INFINITY WAR_ in May, _SOLO: A STAR WARS STORY_ in May and _SPIDER-MAN: INTO THE SPIDER-VERSE_ in December, as well as the _BUMBLEBEE_ film in December from our Franchise brand, TRANSFORMERS.

Through 2017, these included brands such as BABY ALIVE, FURBY, FURREAL FRIENDS, HANAZUKI, KRE-O, PLAYSKOOL and PLAYSKOOL HEROES.

Beginning in 2018, the BABY ALIVE brand is moving to Franchise Brands and LITTLEST PET SHOP will be included in Emerging Brands.

The following is a discussion of each segment.

of theatrical releases of major motion pictures for which we offer products, and changes in overall economic conditions.

The types of programs that we plan to employ to promote sales in 2018 are substantially the same as those we employed in 2017 and in prior years.

During 2017, we utilized cash from our operations, borrowings under our commercial paper program and uncommitted lines of credit as well as excess proceeds from the 2017 issuance of long-term debt to meet our cash flow requirements.

In 2017, 2016 and 2015, we incurred $405.5 million, $409.5 million, and $379.2 million, respectively, of royalty expense.

The bankruptcy filing in September 2017 of Toys “R” Us in the U.S. and Canada, and the difficulties of Toys “R” Us in the United Kingdom significantly impacted our sales and profitability in the fourth quarter of 2017 and we expect the financial difficulties of Toys “R” Us will negatively impact our sales in 2018, with the greatest amount of that impact likely to be in the first half of 2018, as we right size our inventory with Toys “R” Us and as they close stores.

There are certain chemicals (including phthalates and BPA) that

The countries of the Far East, particularly China, constitute the largest manufacturing center of toys in the world and the majority of our toy products are manufactured in China.

The 1996 implementation of the General Agreement on Tariffs and Trade reduced or eliminated customs duties on many of the products imported by us.

standards.

_Financial Information about Segments and Geographic Areas_

The information required by this item is included in Note 20 of the notes to consolidated financial statements included in Item 8 of Part II of this report and is incorporated herein by reference.

| Tom Courtney(5) | | | 57 | | | Executive Vice President, Global Operations | | | Since 2017 | |

| (4) Prior thereto, Executive Vice President, Global Operations and Business Development from 2014 to 2017; Executive Vice President and Chief Development Officer from 2013 to 2014; and Senior Vice President and Global Chief Development Officer from 2008 to 2013. |

| (7) Prior thereto, Senior Vice President, Chief Legal Officer and Secretary from 2010 to 2014. |

The Securities and Exchange Commission maintains an internet site that contains reports, proxy and information statements, and other information about issuers who file electronically.

That site is at http://www.sec.gov.

| --- | --- |

The Company is currently party to certain legal proceedings, none of which we believe to be material to our business or financial condition

[removed: ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF] [added: OF] THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December [removed: 31, 2017][added: 30, 2018]

Registrant’s telephone number, including area code [removed: (401) 431-8697][added: (401) 431-8697]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Website, if any,] every Interactive Data File [removed: required] to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

| Large Accelerated Filer | | ☒ | | | Accelerated Filer | | | | ☐ | | | Non-Accelerated Filer ☐ | | [removed: |] Smaller Reporting Company | | [removed: | |] ☐ | [removed: |]

| Emerging Growth Company | | ☐ | | | | | | | | | | [removed: (Do not check if smaller reporting company)] | | | | | [removed: | | | |]

The aggregate market value on June [removed: 30, 2017] [added: 29, 2018] (the last business day of the Company’s most recently completed second quarter) of the voting common stock held by non-affiliates of the registrant, computed by reference to the closing price of the stock on that date, was approximately [removed: $12,408,366,242.][added: $10,601,897,195.]

The number of shares of common stock outstanding as of February [removed: 7, 2018] [added: 8, 2019] was [removed: 124,177,681.][added: 125,842,470.]

Portions of our definitive proxy statement for our [removed: 2017] [added: 2019] Annual Meeting of Shareholders are incorporated by reference into Part III of this Report.

| | | [removed: PART I] [added: [PART I](#tx678728_1)] | | | | |

| Item 1. | | [removed: [Business](#tx501434_1)] [added: [Business](#tx678728_2)] | | | 3 | |

| Item 1A. | | [Risk [removed: Factors](#tx501434_2)] [added: Factors](#tx678728_3)] | | | [removed: 11] [added: 12] | |

| Item 1B. | | [Unresolved Staff [removed: Comments](#tx501434_3)] [added: Comments](#tx678728_4)] | | | [removed: 25] [added: 27] | |

| Item 2. | | [removed: [Properties](#tx501434_4)] [added: [Properties](#tx678728_5)] | | | [removed: 25] [added: 27] | |

| Item 3. | | [Legal [removed: Proceedings](#tx501434_5)] [added: Proceedings](#tx678728_6)] | | | [removed: 25] [added: 27] | |

| Item 4. | | [Mine Safety [removed: Disclosures](#tx501434_6)] [added: Disclosures](#tx678728_7)] | | | [removed: 25] [added: 28] | |

| | | [removed: PART II] [added: [PART II](#tx678728_8)] | | | | |

| Item 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#tx501434_8)] [added: Securities](#tx678728_9)] | | | [removed: 26] [added: 29] | |

| Item 6. | | [Selected Financial [removed: Data](#tx501434_9)] [added: Data](#tx678728_10)] | | | [removed: 27] [added: 29] | |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#tx501434_10)] [added: Operations](#tx678728_11)] | | | [removed: 27] [added: 30] | |

| Item 7A. | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#tx501434_11)] [added: Risk](#tx678728_12)] | | | [removed: 49] [added: 52] | |

| Item 8. | | [Financial Statements and Supplementary [removed: Data](#tx501434_12)] [added: Data](#tx678728_13)] | | | [removed: 50] [added: 53] | |

| Item 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#tx501434_13)] [added: Disclosure](#tx678728_14)] | | | [removed: 92] [added: 94] | |

| Item 9A. | | [Controls and [removed: Procedures](#tx501434_14)] [added: Procedures](#tx678728_15)] | | | [removed: 92] [added: 95] | |

| Item 9B. | | [Other [removed: Information](#tx501434_15)] [added: Information](#tx678728_16)] | | | [removed: 94] [added: 97] | |

| | | [removed: PART III] [added: [PART III](#tx678728_17)] | | | | |

| Item 10. | | [Directors, Executive Officers and Corporate [removed: Governance](#tx501434_16)] [added: Governance](#tx678728_18)] | | | [removed: 95] [added: 98] | |

| Item 11. | | [Executive [removed: Compensation](#tx501434_17)] [added: Compensation](#tx678728_19)] | | | [removed: 95] [added: 98] | |

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#tx501434_18)] [added: Matters](#tx678728_20)] | | | [removed: 95] [added: 98] | |

| Item 13. | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#tx501434_19)] [added: Independence](#tx678728_21)] | | | [removed: 95] [added: 98] | |

| Item 14. | | [Principal Accountant Fees and [removed: Services](#tx501434_20)] [added: Services](#tx678728_22)] | | | [removed: 95] [added: 98] | |

| | | [removed: PART IV] [added: [PART IV](#tx678728_23)] | | | | |

| Item 15. | | [Exhibits, Financial Statement [removed: Schedules](#tx501434_21)] [added: Schedules](#tx678728_24)] | | | [removed: 96] [added: 99] | |

| Item 16. | | [Form 10-K [removed: Summary](#tx501434_22)] [added: Summary](#tx678728_25)] | | | [removed: 96] [added: 99] | |

From time to time, including in this Annual Report on Form 10-K [added: (“Form 10-K”)] and in our annual report to shareholders, we publish “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

These “forward-looking statements” may relate to [removed: such] matters [added: such] as our business and marketing strategies, anticipated financial performance or business prospects in future periods, expected technological and product developments, [added: relationships with customers and suppliers, purchasing patterns of our customers and consumers,] the expected content of and timing for scheduled new product introductions or our expectations concerning the future acceptance of products by customers, [added: expected benefits and plans relating to acquired brands and properties,] the content and timing of planned entertainment releases including motion pictures, television and digital [removed: products; and] [added: products,] marketing and promotional efforts, research and development activities, [added: geographic plans, adequacy of supply, manufacturing capacity and expectations to reduce manufacturing in China, adequacy of our properties, expected benefits and cost-reductions from certain restructuring actions, capital expenditures, working capital,] liquidity, and [added: other financial, tax, accounting and] similar matters.

The factors listed below and in [added: Part I,] Item 1A of this [removed: Annual Report] [added: Form 10-K] are illustrative and other risks and uncertainties may arise as are or may be detailed from time to time in our public announcements and our filings with the Securities and Exchange Commission, such as on Forms 8-K, 10-Q and 10-K.

We undertake no obligation to make any revisions to the forward-looking statements contained in this [removed: Annual Report on] Form 10-K or in our annual report to shareholders to reflect events or circumstances occurring after the date of the filing of this [removed: report.][added: report]

10-K 1 d678728d10k.htm 10-K

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | [Signatures](#tx678728_26) | | | 105 | |

Special Note Regarding Forward-Looking Statements

10-K 1 d501434d10k.htm 10-K

(Check one:)

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | [Signatures](#tx501434_23) | | | 102 | |

Unless otherwise specifically indicated, all dollar or share amounts herein are expressed in millions of dollars or shares, except for per share amounts.

In addition to the above facilities, the Company also leases office space consisting of approximately [removed: 119,400] [added: 126,000] square feet in Renton, Washington as well as warehouse space aggregating approximately [removed: 2,238,000] [added: 3,378,000] square feet in Georgia, California, [removed: Texas] [added: Illinois] and Quebec that are also used by the U.S. and Canada segment.

The Company leases approximately 80,000 square feet in Burbank, California, [removed: 24,000] [added: 24,500] square feet in Boulder Colorado and 27,400 square feet in Dublin, Ireland that are used by the Entertainment and Licensing segment.

The Global Operations segment also leases an aggregate of [removed: 105,000] [added: 114,000] square feet of office and warehouse space in Hong Kong as well as 86,000 square feet of office space leased in the People’s Republic of China.

Outside of [removed: its United States and Canada facilities,] the [added: properties listed above, the] Company leases or owns property in over 30 countries.

The primary locations for facilities in the International segment are in [removed: Australia ,] [added: Australia,] Brazil, France, Germany, Hong Kong, Mexico, Russia, Spain, the People’s Republic of China, and the United Kingdom, all of which are comprised of both office and warehouse space.

The Company believes that its facilities are adequate for its needs at this time, although as part of its ongoing business it does periodically assess if alternate facilities to one or more of the facilities mentioned above would provide business advantages.

| Item 3. | _Legal Proceedings._ |

| --- | --- |

On or about September 28, 2018, a putative securities class action complaint was filed against the Company and certain of our officers and/or directors (the “Defendants”) in the U.S. District Court for the District of Rhode Island, on behalf of all purchasers of Hasbro common stock between April 24, 2017 and October 23, 2017, inclusive.

The complaint alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, alleging that Defendants purportedly made materially false and misleading statements in connection with the

##### [Table of Contents](#toc)

financial condition of Toys“R”Us, Inc. and its impact on the Company, as well as the financial impact on the Company’s business of economic conditions in the United Kingdom and Brazil.

Defendants deny liability and intend to vigorously defend the action.

The Company is currently party to certain other legal proceedings, none of which we believe to be material to our business or financial condition.

None.

The Company believes that its facilities are adequate for its needs.

In [removed: February 2015,] [added: May 2018,] the Company announced that its Board of Directors authorized the repurchase of [removed: an additional] [added: up to] $500 million in [removed: common stock.][added: Common Stock.]

| October 2018 10/1/18 — 10/28/18 | | | 208,053 | | | $ | 101.05 | | | | 208,053 | | | $ | 464,635,143 | |

| November 2018 10/29/18 — 12/02/18 | | | 221,601 | | | $ | 96.43 | | | | 221,601 | | | $ | 443,265,856 | |

| December 2018 12/03/18 — 12/30/18 | | | 176,770 | | | $ | 86.55 | | | | 176,770 | | | $ | 427,965,874 | |

| Total | | | 606,424 | | | $ | 95.16 | | | | 606,424 | | | $ | 427,965,874 | |

| --- | --- |

The following table sets forth the high and low sales prices in the applicable quarters, as reported on the Composite Tape of The NASDAQ Global Select Market as well as the cash dividends declared per share of Common Stock for the periods listed.

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Sales Prices | | | | | | | | Cash Dividends Declared | | |

| Period | | High | | | | Low | | | | | | |

| 2017 | | | | | | | | | | | | |

| 1st Quarter | | $ | 101.08 | | | | 77.20 | | | $ | 0.57 | |

| 2nd Quarter | | | 113.49 | | | | 94.76 | | | | 0.57 | |

| 3rd Quarter | | | 116.20 | | | | 91.57 | | | | 0.57 | |

| 4th Quarter | | | 99.17 | | | | 87.92 | | | | 0.57 | |

| 2016 | | | | | | | | | | | | |

| 1st Quarter | | $ | 79.40 | | | | 65.52 | | | $ | 0.51 | |

| 2nd Quarter | | | 88.53 | | | | 77.42 | | | | 0.51 | |

| 3rd Quarter | | | 87.00 | | | | 76.80 | | | | 0.51 | |

| 4th Quarter | | | 87.96 | | | | 76.14 | | | | 0.51 | |

The approximate number of holders of record of the Company’s Common Stock as of February 7, 2018 was 8,210.

See Part III, Item 12 of this report for the information concerning the Company’s “Equity Compensation Plans”.

Dividends

Declaration of dividends is at the discretion of the Company’s Board of Directors and will depend upon the earnings and financial condition of the Company and such other factors as the Board of Directors deems appropriate.

| October 2017 10/02/17 — 10/29/17 | | | 47,300 | | | $ | 94.91 | | | | 47,300 | | | $ | 211,977,034 | |

| November 2017 10/30/17 — 12/03/17 | | | 364,813 | | | $ | 93.23 | | | | 364,813 | | | $ | 177,966,196 | |

| December 2017 12/04/17 — 12/31/17 | | | 281,549 | | | $ | 90.84 | | | | — | | | $ | 177,966,196 | |

| Total | | | 693,662 | | | $ | 92.37 | | | | 412,113 | | | $ | 177,966,196 | |

##### [Table of Contents](#toc)

In December 2017, the Company repurchased 281,549 shares in connection with the vesting of certain restricted stock awards.

The shares were delivered by the award recipient as payment of the withholding taxes related to the vesting of the award.

These shares were repurchased at the market price on the date of the issuance of the restricted stock.

| Item 6_._ | _Selected Financial Data__._ |

(Thousands of dollars and shares except per share data and ratios)

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Fiscal Year | | | | | | | | | | | | | | | | | | |

| | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |

| Consolidated Statements of Operations Data: | | | | | | | | | | | | | | | | | | | | |

| Net revenues | | $ | 5,209,782 | | | | 5,019,822 | | | | 4,447,509 | | | | 4,277,207 | | | | 4,082,157 | |

| Operating Profit | | $ | 810,359 | | | | 788,048 | | | | 691,933 | | | | 635,375 | | | | 467,093 | |

| Net earnings | | $ | 396,607 | | | | 533,151 | | | | 446,872 | | | | 413,310 | | | | 283,928 | |

| Net loss attributable to noncontrolling interests | | $ | — | | | | (18,229 | ) | | | (4,966 | ) | | | (2,620 | ) | | | (2,270 | ) |

| Net earnings attributable to Hasbro, Inc. | | $ | 396,607 | | | | 551,380 | | | | 451,838 | | | | 415,930 | | | | 286,198 | |

| --- | --- |

(Thousands of dollars and shares except per share data)

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | Fiscal Year | | | | | | | | | | | | | | | | | | |

| | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |

| Consolidated Statements of Operations Data: | | | | | | | | | | | | | | | | | | | | |

| Net revenues | | $ | 4,579,646 | | | | 5,209,782 | | | | 5,019,822 | | | | 4,447,509 | | | | 4,277,207 | |

| Operating Profit | | $ | 331,052 | | | | 810,359 | | | | 788,048 | | | | 691,933 | | | | 635,375 | |

| Net earnings | | $ | 220,434 | | | | 396,607 | | | | 533,151 | | | | 446,872 | | | | 413,310 | |

| Net loss attributable to noncontrolling interests | | $ | — | | | | — | | | | (18,229 | ) | | | (4,966 | ) | | | (2,620 | ) |

| Net earnings attributable to Hasbro, Inc. | | $ | 220,434 | | | | 396,607 | | | | 551,380 | | | | 451,838 | | | | 415,930 | |

| Per Common Share Data: | | | | | | | | | | | | | | | | | | | | |

| Net Earnings Attributable to Hasbro, Inc. | | | | | | | | | | | | | | | | | | | | |

| Basic | | $ | 1.75 | | | | 3.17 | | | | 4.40 | | | | 3.61 | | | | 3.24 | |

| Diluted | | $ | 1.74 | | | | 3.12 | | | | 4.34 | | | | 3.57 | | | | 3.20 | |

| Cash dividends declared | | $ | 2.52 | | | | 2.28 | | | | 2.04 | | | | 1.84 | | | | 1.72 | |

| Consolidated Balance Sheets Data: | | | | | | | | | | | | | | | | | | | | |

| Total assets | | $ | 5,262,988 | | | | 5,289,983 | | | | 5,091,366 | | | | 4,720,717 | | | | 4,518,100 | |

| Total long-term debt(1) | | $ | 1,709,895 | | | | 1,709,895 | | | | 1,559,895 | | | | 1,559,895 | | | | 1,559,895 | |

| Weighted Average Number of Common Shares: | | | | | | | | | | | | | | | | | | | | |

| Basic | | | 126,132 | | | | 125,039 | | | | 125,292 | | | | 125,006 | | | | 128,411 | |

| Diluted | | | 126,890 | | | | 127,031 | | | | 126,966 | | | | 126,688 | | | | 129,886 | |

| (1) | Represents principal balance of long-term debt. Excludes related deferred debt expenses. |

| --- | --- |

##### [Table of Contents](#toc)

See “Risk Factors” contained in Part I, Item 1A of this Form 10-K for a discussion of risks and uncertainties that may affect future results.

Also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Part II, Item 7 of this Form 10-K for a discussion of factors affecting the comparability of information contained in this Item 6.

We have audited the accompanying consolidated balance sheets of Hasbro, Inc. and subsidiaries (the “Company”) as of December [removed: 31, 2017] [added: 30, 2018] and December [removed: 25, 2016,] [added: 31, 2017,] the related consolidated statements of operations, comprehensive earnings, cash [removed: flows] [added: flows,] and shareholders’ equity and redeemable noncontrolling [removed: interests] [added: interest] for each of the years in the three-year period ended December [removed: 31, 2017,] [added: 30, 2018,] and the related notes and financial statement schedule II (collectively, the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December [removed: 31, 2017] [added: 30, 2018] and December [removed: 25, 2016,] [added: 31, 2017,] and the results of its operations and its cash flows for each of the years in the three-year period ended December [removed: 31, 2017,] [added: 30, 2018,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December [removed: 31, 2017,] [added: 30, 2018,] based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, [removed: 2018] [added: 2019] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

/s/ KPMG [added: LLP]

We have not been able to determine the specific year that we began serving as the Company’s auditor, [removed: however] [added: however,] we are aware that we have served as the Company’s auditor since at least 1968.

[removed: February 26,] [added: |] 2018 [added: | | | | | | | | | | | | | | | | | | | | |]

December [removed: 31, 2017] [added: 30, 2018] and December [removed: 25, 2016][added: 31, 2017]

| | | [added: 2018 | | | |] 2017 | | | | 2016 | | |

| Cash and cash equivalents [added: at beginning of year] | | [removed: $] | 1,581,234 | | | | 1,282,285 | | [added: | | 976,750 | |]

| Accounts receivable, less allowance for doubtful accounts of [removed: $31,400] [added: $9,100] in [removed: 2017] [added: 2018] and [removed: $16,800] [added: $31,400] in [removed: 2016] [added: 2017] | | | [removed: 1,405,399] [added: 1,188,052] | | | | [removed: 1,319,963] [added: 1,405,399] | |

| Inventories | | | [removed: 433,293] [added: 443,383] | | | | [removed: 387,675] [added: 433,293] | |

| Prepaid expenses and other current assets | | | [removed: 214,000] [added: 268,698] | | | | [removed: 237,684] [added: 214,000] | |

| Total current assets | | | [removed: 3,633,926] [added: 3,082,504] | | | | [removed: 3,227,607] [added: 3,633,926] | |

| Property, plant and equipment, net | | | [removed: 259,710] [added: 256,473] | | | | [removed: 267,398] [added: 259,710] | |

| Goodwill | | | [removed: 573,063] [added: 485,881] | | | | [removed: 570,555] [added: 573,063] | |

| Other intangibles, net | | | [removed: 217,382] [added: 693,842] | | | | [removed: 245,949] [added: 217,382] | |

| Other | | | [removed: 605,902] [added: 744,288] | | | | [removed: 779,857] [added: 605,902] | |

| Total other assets | | | [removed: 1,396,347] [added: 1,924,011] | | | | [removed: 1,596,361] [added: 1,396,347] | |

| Total assets | | $ | [removed: 5,289,983] [added: 5,262,988] | | | | [removed: 5,091,366] [added: 5,289,983] | |

| [removed: LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS] [added: LIABILITIES] AND SHAREHOLDERS’ EQUITY | | | | | | | | |

| Short-term borrowings | | $ | [removed: 154,957] [added: 9,740] | | | | [removed: 172,582] [added: 154,957] | |

[removed: | Current portion of long-term debt | | | — | | | | 349,713 | |][added: (10) Long-Term Debt]

| Accounts payable | | | [removed: 348,476] [added: 333,521] | | | | [removed: 319,525] [added: 348,476] | |

| Accrued liabilities | | | [removed: 748,264] [added: 931,063] | | | | [removed: 776,039] [added: 748,264] | |

| Total current liabilities | | | [removed: 1,251,697] [added: 1,274,324] | | | | [removed: 1,617,859] [added: 1,251,697] | |

| Long-term debt | | | [removed: 1,693,609] [added: 1,695,092] | | | | [removed: 1,198,679] [added: 1,693,609] | |

| Other liabilities | | | [removed: 514,720] [added: 539,086] | | | | [removed: 389,388] [added: 514,720] | |

| Total liabilities | | | [removed: 3,460,026] [added: 3,508,502] | | | | [removed: 3,205,926] [added: 3,460,026] | |

| Common stock of $0.50 par value. Authorized 600,000,000 shares; issued 209,694,630 shares in [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] | | | 104,847 | | | | 104,847 | |

| Additional paid-in capital | | | [removed: 1,050,605] [added: 1,275,059] | | | | [removed: 985,418] [added: 1,050,605] | |

| Retained earnings | | | [removed: 4,260,222] [added: 4,184,374] | | | | [removed: 4,148,722] [added: 4,260,222] | |

| Accumulated other comprehensive loss | | | [removed: (239,425] [added: (294,514] | ) | | | [removed: (194,570] [added: (239,425] | ) |

| Treasury stock, at cost, [removed: 85,244,923] [added: 83,565,598] shares in [removed: 2017] [added: 2018] and [removed: 85,207,677] [added: 85,244,923] shares in [removed: 2016] [added: 2017] | | | [removed: (3,346,292] [added: (3,515,280] | ) | | | [removed: (3,181,681] [added: (3,346,292] | ) |

| Total shareholders’ equity | | | [removed: 1,829,957] [added: 1,754,486] | | | | [removed: 1,862,736] [added: 1,829,957] | |

| Total [removed: liabilities, redeemable noncontrolling interests] [added: liabilities] and shareholders’ equity | | $ | [removed: 5,289,983] [added: 5,262,988] | | | | [removed: 5,091,366] [added: 5,289,983] | |

| | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Net revenues | | $ | [removed: 5,209,782] [added: 4,579,646] | | | | [removed: 5,019,822] [added: 5,209,782] | | | | [removed: 4,447,509] [added: 5,019,822] | |

| Cost of sales | | | [removed: 2,033,693] [added: 1,850,678] | | | | [removed: 1,905,474] [added: 2,033,693] | | | | [removed: 1,677,033] [added: 1,905,474] | |

| Royalties | | | [removed: 405,488] [added: 351,660] | | | | [removed: 409,522] [added: 405,488] | | | | [removed: 379,245] [added: 409,522] | |

| Product development | | | [removed: 269,020] [added: 246,165] | | | | [removed: 266,375] [added: 269,020] | | | | [removed: 242,944] [added: 266,375] | |

February 26, 2019

| | | 2018 | | | | 2017 | | |

| Cash and cash equivalents | | $ | 1,182,371 | | | | 1,581,234 | |

| Net earnings | | $ | 220,434 | | | | 396,607 | | | | 533,151 | |

| Impairment of intangible assets | | | 31,303 | | | | — | | | | — | |

| Amortization of intangible assets | | | 28,703 | | | | 28,818 | | | | 34,763 | |

| Program production cost amortization | | | 43,906 | | | | 35,798 | | | | 35,931 | |

| Impact of adoption of ASU 2018-02 | | | — | | | | — | | | | 21,503 | | | | (21,503 | ) | | | — | | | | — | | | | | |

| Issuance of shares for Saban purchase | | | — | | | | 198,853 | | | | — | | | | — | | | | 81,544 | | | | 280,397 | | | | — | |

| Dividends declared | | | — | | | | — | | | | (317,785 | ) | | | — | | | | — | | | | (317,785 | ) | | | — | |

| Balance, December 30, 2018 | | $ | 104,847 | | | | 1,275,059 | | | | 4,184,374 | | | | (294,514 | ) | | | (3,515,280 | ) | | $ | 1,754,486 | | | $ | — | |

At December 30, 2018, the Company had no majority-owned subsidiaries.

planned to be discontinued, slow-moving and obsolete inventory is written down to its estimated net realizable value.

In establishing the value of such rights, the Company considers existing

During the fourth quarter of 2018 the Company adopted Accounting Standards Update No 2017-04 (ASU 2017-04), _Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment_.

The standard eliminates the requirement to measure the implied fair value of goodwill by assigning the fair value of a reporting unit to all assets and liabilities within that unit (“the Step 2 test”) from the goodwill impairment test.

Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited by the amount of goodwill in that reporting unit.

The first step was a screen for potential impairment while the second step was to determine the implied fair value of the goodwill and compare it to its carrying amount on the balance sheet.

Under ASU 2017-04, the Step 2 test was eliminated.

As a result, once it has been determined that the carrying amount of a reporting unit exceeds its fair value, the excess carrying amount is recognized as an impairment loss.

During the fourth quarter of 2018, the Company recorded a non-cash impairment charge of $86,253 within administrative expense and in the Company’s Entertainment and Licensing segment, which was the full amount of remaining goodwill associated with the Backflip reporting unit.

As a result of the 2017 assessment the Company concluded that no impairments were indicated as the estimated fair values were in excess of the carrying values of the related reporting units.

See further discussion in note 5.

In the fourth quarter of 2018, the Company recorded non-cash impairments of $31,303.

No impairments were recorded in 2017 or 2016.

See further discussion in note 5.

approximated their fair value.

Revenue is recognized when control of the promised goods is transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods.

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance, and collectability of consideration is probable.

On January 1, 2018, the Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 606, _Revenue from Contracts with Customers_ (ASC 606 or the “New Revenue Standard”) using the modified retrospective method.

The cumulative impact of the adoption of the New Revenue Standard was not material to the Company therefore the Company did not record any adjustments to retained earnings.

This was determined by analyzing contracts not completed as of January 1, 2018.

The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

For further details, see note 2 for further discussion.

Prior to the adoption of ASC 606, for licenses of the Company’s brands that are subject to minimum guaranteed license fees, the Company recognized the difference between the minimum guaranteed amount and the actual royalties earned from licensee merchandise sales (“shortfalls”) at the end of the contract period, which was in the fourth quarter for most of the Company’s licensee arrangements.

In periods following January 1, 2018, minimum guaranteed amounts are being recognized on a straight-line basis over the license period.

The majority of the Company’s revenues are derived from sales of finished products to customers.

Revenues from sales of finished products to customers accounted for 92% and 94% of the Company’s revenues for the years ended December 30, 2018 and December 31, 2017, respectively.

When determining whether control of the finished products has transferred to the customer, the Company considers any future performance obligations.

Any shipping and handling activities that are performed by the Company, whether before or after a customer has obtained control of the products, are considered activities to fulfill our obligation to transfer the products, and are recorded as incurred within selling, distribution, and administration expenses.

##### [Table of Contents](#toc)

HASBRO, INC. AND SUBSIDIARIES

| | | | | | | | | |

| Redeemable noncontrolling interests | | | — | | | | 22,704 | |

| Cash proceeds from dispositions | | | — | | | | — | | | | 18,632 | |

| Cash and cash equivalents at beginning of year | | | 1,282,285 | | | | 976,750 | | | | 893,167 | |

| (1) | See Note 22, “Subsequent Event,” for discussion on changes to tax guidance that will impact this line item |

| Balance, December 28, 2014 | | $ | 104,847 | | | | 806,265 | | | | 3,630,072 | | | | (95,454 | ) | | | (2,980,066 | ) | | $ | 1,465,664 | | | $ | 42,730 | |

| Net loss attributable to noncontrolling interests | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (4,966 | ) |

| Dividends declared | | | — | | | | — | | | | (229,589 | ) | | | — | | | | — | | | | (229,589 | ) | | | — | |

| Net contributions received from noncontrolling owners | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2,406 | |

(Thousands of Dollars and Shares Except Per Share Data)

Notes to Consolidated Financial Statements — (Continued)

asset to future undiscounted cash flows expected to be generated by the asset or asset group.

The first step is a screen for potential impairment while the second step measures the amount of impairment if there is an indication from the first step that one exists.

When performing the quantitative two-step impairment test, goodwill and intangible assets with indefinite lives are tested for impairment by comparing their carrying value to their estimated fair value, also calculated using the present value of expected future cash flows.

The Company’s financial instruments at December 31, 2017 also include long-term

Provisions for discounts, rebates and returns are made when the related revenues are recognized.

The Company bases its estimates for discounts, rebates and returns on agreed customer terms and historical experience.

The Company enters into arrangements licensing its brands on specifically approved products or formats.

The licensees pay the Company royalties based on their revenues derived from the brands, in some cases subject to minimum guaranteed amounts.

Royalty revenues are recognized as they are reported as earned and payment becomes assured, over the life of the license agreement.

Revenues from the distribution of television and other programming are recorded when the use of the content may be directed by the distributor and when certain other conditions are met.

Revenue from product sales less related provisions for discounts, rebates and returns, as well as royalty, television programming and digital gaming revenues comprise net revenues in the consolidated statements of operations.

In May 2014, the Financial Accounting Standards Board (“FASB”), in cooperation with the International Accounting Standards Board (“IASB”), issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (ASC 606).

ASU 2014-09 may be adopted on a full retrospective basis and applied to all prior periods presented, or on a modified retrospective basis through a cumulative adjustment recorded to opening retained earnings in the year of initial application.

See Note 10 for further discussion on the Company’s accounting for the Tax Cuts and Jobs Act enacted in December 2017.

| | • | | A requirement that all tax-related cash flows resulting from share-based payments be reported as operating activities, included with other income tax cash flows on the statement of cash flows. Previously, these amounts were reported as a cash inflow from financing activities. The Company elected to apply this requirement of the standard retrospectively. Accordingly, the cash flow statement for the years ended December 25, 2016 and December 27, 2015 have been restated to include $20,471 and $14,228, respectively, of cash flows from excess tax benefits, previously included as financing activities, in operating activities within the increase in accounts payable and other accrued liabilities. For the year ended December 31, 2017 excess tax benefits of $32,116 were reported as operating activities. |

| | • | | A requirement that all cash payments made to taxing authorities on the employees’ behalf for withheld shares shall be presented as financing activities in the statements of cash flows. Prior to adoption of ASU 2016-09, these cash flows were included as operating activities. This change was required to be applied on a retrospective basis and as a result, the Company has restated the consolidated statement of cash flows for the years ended December 25, 2016 and December 27, 2015. This change resulted in payments of $21,969 and $4,693 for the years ended December 25, 2016 and December 27, 2015, respectively, being included in financing activities. For the year ended December 31, 2017, such payments amounted to $31,994. |

There were no antidilutive stock options or restricted stock unit awards to exclude from the diluted earnings per share calculation in 2015.

| Balance at December 27, 2015 | | $ | (102,931 | ) | | | 79,317 | | | | 1,258 | | | | (123,645 | ) | | | (146,001 | ) |

| 2015 | | | | | | | | | | | | | | | | | | | | |

| Balance at December 28, 2014 | | $ | (113,092 | ) | | | 43,689 | | | | 1,900 | | | | (27,951 | ) | | | (95,454 | ) |

| Current period other comprehensive earnings (loss) | | | 6,892 | | | | 86,155 | | | | (642 | ) | | | (95,694 | ) | | | (3,289 | ) |

| | | | 602,499 | | | | 569,500 | |

| | | | 180,447 | | | | 185,787 | |

| Balance at December 25, 2016 | | $ | 296,978 | | | | 169,833 | | | | 103,744 | | | | 570,555 | |

| 2016 | | | | | | | | | | | | | | | | |

| Balance at December 27, 2015 | | $ | 296,978 | | | | 170,110 | | | | 125,607 | | | | 592,695 | |

| Impairment during the period | | | — | | | | — | | | | (32,858 | ) | | | (32,858 | ) |

##### [Table of Contents](#toc)

The Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December [removed: 31, 2017.][added: 30, 2018.]

Hasbro’s management assessed the effectiveness of its internal control over financial reporting as of December [removed: 31, 2017.][added: 30, 2018.]

Based on this assessment, Hasbro’s management concluded that, as of December [removed: 31, 2017,] [added: 30, 2018,] its internal control over financial reporting is effective based on those criteria.

We have audited Hasbro, [removed: Inc.’s (and subsidiaries_’_)] [added: Inc. and subsidiaries] (the “Company”) internal control over financial reporting as of December [removed: 31, 2017,] [added: 30, 2018,] based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December [removed: 31, 2017,] [added: 30, 2018,] based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company [removed: and subsidiaries] as of December [removed: 31, 2017] [added: 30, 2018] and December [removed: 25, 2016, and] [added: 31, 2017,] the related consolidated statements of operations, comprehensive earnings, cash [removed: flows] [added: flows,] and shareholders’ equity and redeemable noncontrolling [removed: interests] [added: interest] for each of the [removed: fiscal] years in the three-year period ended December [removed: 31, 2017,] [added: 30, 2018,] and the related notes and financial statement schedule II (collectively, the “consolidated financial statements”), and our report dated February 26, [removed: 2018] [added: 2019] expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG [added: LLP]

There were no changes in the Company’s internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act, during the quarter ended December [removed: 31, 2017,] [added: 30, 2018,] that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

February 26, 2019

February 26, 2018

Certain of the information required by this item is contained under the captions “Election of Directors”, “Governance of the Company” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s definitive proxy statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders and is incorporated herein by reference.

The information required by this item with respect to executive officers of the Company is included in Part [removed: I] [added: I, Item 1] of this [removed: Annual Report on] Form 10-K under the caption “Executive Officers of the Registrant” and is incorporated herein by reference.

The Company has also posted on its website, in the Corporate Governance location referred to above, copies of its Corporate Governance Principles and of the charters for its (i) Audit, (ii) Compensation, (iii) [removed: Cybersecurity and Data Privacy (iv)] Finance, [removed: (v)] [added: (iv)] Nominating, Governance and Social Responsibility, [added: (v) Executive Committee] and (vi) [removed: Executive Committees] [added: Cybersecurity and Data Privacy Committee] of its Board of Directors.

In addition to being accessible on the Company’s website, copies of the Company’s Code of Conduct, Corporate Governance Principles, and charters for the Company’s six Board Committees, are all available free of charge upon request to the Company’s [removed: Executive] [added: Senior] Vice President, Chief Legal Officer and Corporate Secretary, [removed: Barbara Finigan,] [added: Tarrant Sibley,] at 1027 Newport Avenue, P.O. Box 1059, Pawtucket, R.I. 02861-1059.

The information required by this item is contained under the captions “Compensation of Directors”, “Executive Compensation”, “Compensation Committee Report”, “Compensation Discussion and Analysis” and “Compensation Committee Interlocks and Insider Participation” in the Company’s definitive proxy statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders and is incorporated herein by reference.

The information required by this item is contained under the captions “Voting Securities and Principal Holders Thereof”, “Security Ownership of Management” and “Equity Compensation Plans” in the Company’s definitive proxy statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders and is incorporated herein by reference.

The information required by this item is contained under the captions “Governance of the Company” and “Certain Relationships and Related Party Transactions” in the Company’s definitive proxy statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders and is incorporated herein by reference.

The information required by this item is contained under the caption “Additional Information Regarding Independent Registered Public Accounting Firm” in the Company’s definitive proxy statement for the [removed: 2018] [added: 2019] Annual Meeting of Shareholders and is incorporated herein by reference.

Consolidated Balance Sheets at December [removed: 31, 2017] [added: 30, 2018] and December [removed: 25, 2016][added: 31, 2017]

Consolidated Statements of Operations for the Three Fiscal Years Ended in December [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

Consolidated Statements of Comprehensive Earnings for the Three Fiscal Years Ended in December [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

Consolidated Statements of Cash Flows for the Three Fiscal Years Ended in December [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interests for the Three Fiscal Years Ended in December [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

For the Three Fiscal Years Ended in December [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015:][added: 2016:]

Schedule [removed: II — Valuation] [added: II—Valuation] and Qualifying Accounts

| | | (a) | | [Amended and Restated Revolving Credit Agreement, dated as of [removed: March 30, 2015,] [added: November 26, 2018,] by and among Hasbro, Inc., Hasbro SA, Bank of America, [removed: N.A.,] [added: N.A.] Merrill Lynch, Pierce, Fenner & Smith Incorporated, [removed: Citigroup Global Markets Inc., RBS Citizens,] [added: Citibank, N.A., Citizens Bank, N.A., JP Morgan Chase Bank,] N.A. and the other banks party thereto. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated [removed: March 30, 2015,] [added: November 29, 2018,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608015000033/exhibit101.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608018000148/exhibit101.htm)] |

| | | [removed: (b)] [added: (cc)] | | [removed: [Increase Supplement added as of] [added: [Amendment, dated] August [removed: 24, 2017, by and among Hasbro, Inc., Hasbro SA, Bank of America, N.A.,] [added: 5, 2014, to Amended] and [added: Restated Employment Agreement, between] the [removed: lender party hereto.] [added: Company and Brian Goldner.] (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K [removed: filed on] [added: dated as of] August [removed: 28, 2017,] [added: 6, 2014,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608017000103/exhibit101.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608014000080/exhibit101.htm)] |

| | | [removed: (c)] [added: (b)] | | [Form of Commercial Paper Deal Agreement. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 28, 2011, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608011000011/commpaperdealagree.htm) |

| | | [removed: (d)] [added: (c)] | | [Form of Issuing and Paying Agent Agreement. (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed January 28, 2011, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608011000011/isspayagree.htm) |

| | | [removed: (e)] [added: (d)] | | [License Agreement, dated February 17, 2009, by and between Hasbro, Inc., Marvel Characters B.V. and Spider-Man Merchandising L.P. (Portions of this agreement have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.) (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended March 29, 2009, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608009000037/exhibit102.htm) |

| | | [removed: (f)] [added: (e)] | | [Amendment, dated September 27, 2011, to License Agreements by and between Hasbro, Inc., Marvel Characters B.V. and Spider-Man Merchandising L.P. (Portions of this agreement have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.) (Incorporated by reference to Exhibit 10(g) to the Company’s Annual Report on Form 10-K for the period ended December 25, 2011, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000119312512072846/d274949dex10g.htm) |

| | | [removed: (g)] [added: (f)] | | [Amendment, dated December 15, 2011, to License Agreements by and between Hasbro, Inc., Marvel Characters B.V. and Spider-Man Merchandising L.P. (Portions of this agreement have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.) (Incorporated by reference to Exhibit 10(h) to the Company’s Annual Report on Form 10-K for the period ended December 25, 2011, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000119312512072846/d274949dex10h.htm) |

| | | [removed: (h)] [added: (g)] | | [Amendment, dated July 19, 2013, to License Agreements by and between Hasbro, Inc., Marvel Characters B.V. and Spider-Man Merchandising L.P. (Portions of this agreement have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.) (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated July 25, 2013, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608013000069/exhibit10.htm) |

| | | [removed: (i)] [added: (h)] | | [Agreement with TOMY Company, Ltd. relating to TRANSFORMERS, as amended to date. (Portions of this agreement have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.) (Incorporated by reference to Exhibit 10(i) to the Company’s Annual Report on Form 10-K for the period ended December 25, 2011, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000119312512072846/d274949dex10i.htm) |

| | | [removed: (j)] [added: (i)] | | [Amended and Restated Hub Television Networks LLC Limited Liability Company Agreement, as amended September 23, 2014, between the Company, Discovery Communications, LLC, Hub Television Networks LLC and Discovery Communications, Inc. (Portions of this agreement have been omitted pursuant to a request for confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.) (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended September 28, 2014, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608014000109/exhibit101.htm) |

| | | (k) | | [removed: Hasbro,] [added: [Hasbro,] Inc. [removed: Retirement] [added: Deferred Compensation] Plan for [added: Non-Employee] Directors. (Incorporated by reference to Exhibit [removed: 10(x)] [added: 10(cc)] to the Company’s Annual Report on Form 10-K for the Fiscal Year Ended December [removed: 30, 1990,] [added: 26, 1993,] File No. [removed: 1-6682.) (P)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/0000046080-94-000009.txt)] |

| | | (l) | | [First Amendment to Hasbro, Inc. [removed: Retirement] [added: Deferred Compensation] Plan for [added: Non-Employee] Directors, dated April 15, 2003. (Incorporated by reference to Exhibit [removed: 10.1] [added: 10.2] to the Company’s Quarterly Report on Form 10-Q for the period ended June 29, 2003, File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608003000022/ex10-1q203.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608003000022/ex10-2q203.htm)] |

| | | [removed: (m)] [added: (aa)] | | [removed: [Second Amendment to Hasbro,] [added: [Hasbro,] Inc. [removed: Retirement Plan for Directors.] [added: 2018 Performance Rewards Program.] (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended [removed: June 27, 2004,] [added: July 1, 2018,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608004000077/ex10_1q204.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608017000060/exhibit101.htm)] |

| | | [removed: (n)] [added: (o)] | | [removed: [Third] [added: [Fourth] Amendment to Hasbro, Inc. [removed: Retirement] [added: Deferred Compensation] Plan for [added: Non-Employee] Directors, dated October 3, 2007. (Incorporated by reference to Exhibit [removed: 10(ii)] [added: 10(oo)] to the Company’s Annual Report on Form 10-K for the Fiscal Year Ended December 30, 2007, File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013508001244/b68106hiexv10wxiiy.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013508001244/b68106hiexv10wxooy.htm)] |

| | | [removed: (o)] [added: (j)] | | [Form of Director’s Indemnification Agreement. (Incorporated by reference to Exhibit 10(jj) to the Company’s Annual Report on Form 10-K for the Fiscal Year Ended December 30, 2007, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013508001244/b68106hiexv10wxjjy.htm) |

| | | [removed: (p)] [added: (n)] | | [removed: [Hasbro,] [added: [Third Amendment to Hasbro,] Inc. Deferred Compensation Plan for Non-Employee [removed: Directors.] [added: Directors, dated December 15, 2005.] (Incorporated by reference to Exhibit [removed: 10(cc)] [added: 10(nn)] to the Company’s Annual Report on Form 10-K for the Fiscal Year Ended December [removed: 26, 1993,] [added: 25, 2005,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/0000046080-94-000009.txt)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013506001133/b58828hcexv10wxnny.txt)] |

| | | [removed: (q)] [added: (m)] | | [removed: [First] [added: [Second] Amendment to Hasbro, Inc. Deferred Compensation Plan for Non-Employee Directors, dated [removed: April 15,] [added: July 17,] 2003. (Incorporated by reference to Exhibit [removed: 10.2] [added: 10.1] to the Company’s Quarterly Report on Form 10-Q for the period ended [removed: June 29,] [added: September 28,] 2003, File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608003000022/ex10-2q203.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608003000044/exhibit10_1.htm)] |

| | | [removed: (r)] [added: (hh)] | | [removed: [Second Amendment to Hasbro, Inc. Deferred Compensation Plan for Non-Employee Directors,] [added: [Chairmanship Agreement between the Company and Alan Hassenfeld] dated [removed: July 17, 2003.] [added: August 30, 2005.] (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended September [removed: 28, 2003,] [added: 25, 2005,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608003000044/exhibit10_1.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608005000092/alanhassenfeldtransitionagre.htm)] |

| | | [removed: (s)] [added: (x)] | | [removed: [Third Amendment to Hasbro,] [added: [Hasbro,] Inc. [added: Amended and Restated Nonqualified] Deferred Compensation [removed: Plan for Non-Employee Directors, dated December 15, 2005.] [added: Plan.] (Incorporated by reference to Exhibit [removed: 10(nn)] [added: 10(aaa)] to the Company’s Annual Report on Form 10-K for the Fiscal Year [removed: Ended] [added: ended] December [removed: 25, 2005,] [added: 28, 2008,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013506001133/b58828hcexv10wxnny.txt)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013509001151/b73438hiexv10wxaaay.htm)] |

| | | [removed: (t)] [added: (ii)] | | [removed: [Fourth Amendment] [added: [Amendment] to [removed: Hasbro, Inc. Deferred Compensation Plan for Non-Employee Directors, dated October 3, 2007.] [added: Chairmanship Agreement between the Company and Alan Hassenfeld.] (Incorporated by reference to Exhibit [removed: 10(oo)] [added: 10(hhh)] to the Company’s Annual Report on Form 10-K for the Fiscal Year Ended December [removed: 30, 2007,] [added: 28, 2008,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013508001244/b68106hiexv10wxooy.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013509001151/b73438hiexv10wxhhhy.htm)] |

| | | [removed: (u)] [added: (p)] | | [Hasbro, Inc. 2003 Stock Option Plan for Non-Employee Directors. (Incorporated by reference to Appendix B to the Company’s definitive proxy statement for its 2003 Annual Meeting of Shareholders, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013505001952/b53906hidef14a.htm#022) |

| | | [removed: (v)] [added: (q)] | | [Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan. (Incorporated by reference to Appendix D to the definitive proxy statement for its 2017 Annual Meeting of Shareholders, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000119312517109540/d317230ddef14a.htm#tx317230_60) |

| | | [removed: (w)] [added: (r)] | | [First Amendment to Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan. (Incorporated by reference to Appendix C to the definitive proxy statement for the Company’s 2017 Annual Meeting of Shareholders, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000119312517109540/d317230ddef14a.htm#tx317230_59) |

| | | [removed: (x)] [added: (s)] | | [Form of [removed: 2017] [added: 2018] Stock Option Agreement under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan. (Applicable to John Frascotti, Deborah Thomas, [removed: Duncan Billing] [added: Steve Davis] and Wiebe Tinga.) (Incorporated by Reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the period ended [removed: July 2, 2017,] [added: April 1, 2018,] File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608017000095/exhibit101.htm) |

| | | [removed: (y)] [added: (t)] | | [Form of [removed: 2017] [added: 2018] Stock Option Agreement under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan for Brian Goldner. (Incorporated by Reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended [removed: July 2, 2017,] [added: April 1, 2018,] File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608017000095/exhibit102.htm) |

| | | [removed: (z)] [added: (u)] | | [Form of [removed: 2017] [added: 2018] Contingent Stock Performance Award under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan. (Applicable to John Frascotti, Deborah Thomas, [removed: Duncan Billing] [added: Steve Davis] and Wiebe Tinga.) (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the period ended [removed: July 2, 2017,] [added: April 1, 2018,] File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608017000095/exhibit103.htm) |

| | | [removed: (aa)] [added: (v)] | | [Form of [removed: 2017] [added: 2018] Contingent Stock Performance Award under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan for Brian Goldner. (Incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the period ended [removed: July 2, 2017,] [added: April 1, 2018,] File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608017000095/exhibit104.htm) |

| | | [removed: (bb)] [added: (w)] | | [Form of [removed: 2017] [added: 2018] Restricted Stock Unit Agreement under the Hasbro, Inc. Restated 2003 Stock Incentive Performance Plan. (Applicable to John Frascotti, Deborah Thomas, [removed: Duncan Billing,] [added: Steve Davis,] Wiebe Tinga.) (Incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the period ended [removed: July 2, 2017,] [added: April 1, 2018,] File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608017000095/exhibit105.htm) |

| | | [removed: (cc)] [added: (jj)] | | [removed: [Hasbro, Inc. Amended] [added: [Second Amendment to Chairmanship Agreement between the Company] and [removed: Restated Nonqualified Deferred Compensation Plan.] [added: Alan Hassenfeld.] (Incorporated by reference to Exhibit [removed: 10(aaa)] [added: 10(ggg)] to the Company’s Annual Report on Form 10-K for the Fiscal Year [removed: ended] [added: Ended] December [removed: 28, 2008,] [added: 27, 2009,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013509001151/b73438hiexv10wxaaay.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095012310016315/b78678exv10wggg.htm)] |

| | | [removed: (dd)] [added: (y)] | | [Hasbro, Inc. 2014 Senior Management Annual Performance Plan. (Incorporated by reference to Appendix F to the Company’s definitive proxy statement for its 2017 Annual Meeting of Shareholders, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000119312517109540/d317230ddef14a.htm#tx317230_62) |

| | | [removed: (ee)] [added: (z)] | | [First Amendment to Hasbro, Inc. 2014 Senior Management Annual Performance Plan. (Incorporated by reference to Appendix E to the Company’s definitive proxy statement for its 2017 Annual Meeting of Shareholders, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000119312517109540/d317230ddef14a.htm#tx317230_61) |

| | | [removed: (ff)] [added: (mm)] | | [Hasbro, Inc. [removed: 2017 Performance Rewards Program.] [added: Change in Control Severance Plan for Designated Senior Executives.] (Incorporated by reference to Exhibit 10.1 to the Company’s [removed: Quarterly] [added: Current] Report on Form [removed: 10-Q for the period ended April 2, 2017,] [added: 8-K filed May 23, 2011,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608017000060/exhibit101.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608011000059/exhibit10.htm)] |

| | | [removed: (gg)] [added: (bb)] | | [Amended and Restated Employment Agreement, dated October 4, 2012, between the Company and Brian Goldner. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated as of October 11, 2012, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608012000090/exhibit101.htm) |

| | | [removed: (hh)] [added: (ee)] | | [Amendment, dated August [removed: 5, 2014,] [added: 1, 2018,] to Amended and Restated Employment [removed: Agreement,] [added: Agreement] between the Company and Brian Goldner. (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated as of August 6, [removed: 2014,] [added: 2018,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608014000080/exhibit101.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608018000120/exhibit101.htm)] |

| | | [removed: (ii)] [added: (dd)] | | [Amendment, dated December 15, 2016, to Amended and Restated Employment Agreement between the Company and Brian Goldner. (Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K dated as of December 20, 2016, File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608016000223/exhibit10.1.htm) |

| | | [removed: (jj)] [added: (gg)] | | [Letter Agreement between the Company and Wiebe Tinga, dated March 4, 2013. (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2013, file No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608013000041/exhibit102.htm) |

| | | (kk) | | [removed: [Chairmanship] [added: [Third Amendment to Chairmanship] Agreement between the Company and Alan Hassenfeld [removed: dated August 30, 2005.] [added: effective as of November 1, 2013.] (Incorporated by reference to Exhibit [removed: 10.1] [added: 10(yy)] to the Company’s [removed: Quarterly] [added: Annual] Report on Form [removed: 10-Q] [added: 10-K] for the [removed: period ended September 25, 2005,] [added: Fiscal Year Ended December 29, 2013,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608005000092/alanhassenfeldtransitionagre.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000119312514069828/d635020dex10yy.htm)] |

| | | [removed: (ll)] [added: (ff)] | | [removed: [Amendment to Chairmanship Agreement] [added: [Employment Agreement, dated August 1, 2018,] between the Company and [removed: Alan Hassenfeld.] [added: John Frascotti.] (Incorporated by reference to Exhibit [removed: 10(hhh)] [added: 10.2] to the Company’s [removed: Annual] [added: Current] Report on Form [removed: 10-K for the Fiscal Year Ended December 28, 2008,] [added: 8-K dated as of August 6, 2018,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000095013509001151/b73438hiexv10wxhhhy.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608018000120/exhibit102.htm)] |

| | | [removed: (oo)] [added: (ll)] | | [Form of [removed: 2017] [added: 2018] Non-Competition, Non-Solicitation and Confidentiality Agreement. (Applicable to John Frascotti, Deborah Thomas, [removed: Duncan Billing] and Wiebe Tinga.) (Incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended [removed: July 2, 2017,] [added: April 1, 2018,] File No. 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608017000095/exhibit106.htm) |

| | | [removed: (pp)] [added: (nn)] | | [Hasbro, Inc. [removed: Change in Control Severance Plan for Designated Senior Executives.] [added: Clawback Policy.] (Incorporated by reference to Exhibit [removed: 10.1] [added: 99.1] to the Company’s Current Report on Form 8-K [removed: filed May 23, 2011,] [added: dated as of October 11, 2012,] File No. [removed: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608011000059/exhibit10.htm)] [added: 1-6682.)](http://www.sec.gov/Archives/edgar/data/46080/000004608012000090/exhibit991.htm)] |